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updated: 11/2/2012 3:51 PM

Berkshire Hathaway buying Oriental Trading

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Associated Press

OMAHA, Neb. -- Warren Buffett will soon be prepared to throw a giant party for almost any occasion now that his Berkshire Hathaway is buying Oriental Trading Co.

The deal announced Friday will give Buffett ready access to Oriental Trading's catalog of more than 40,000 party supplies, arts, crafts, toys and other trinkets.

And with the acquisition, Berkshire is adding another business based in Buffett's hometown of Omaha to its portfolio of 80-odd companies. The deal is expected to close by the end of November.

"Oriental Trading is a leader in its industry, has a strong management team and delivers exceptional customer value and service," Buffett said.

Financial terms of the deal weren't disclosed, but the purchase isn't likely to require a large portion of Berkshire's roughly $40 billion in cash. Oriental Trading generates about $500 million in sales annually and employs about 2,000 during peak times.

Jeff Matthews, an investor who wrote "Secrets in Plain Sight: Business & Investing Secrets of Warren Buffett," said he thinks Buffett is buying Oriental Trading because he is getting a good price on a local company that has little downside.

"I think this is more of a `good neighbor' type acquisition, like buying the Omaha World-Herald, than hunting for elephants," Matthews said. Berkshire bought the World-Herald and several other newspapers it owned last year for $150 million.

Harry Watanabe founded Oriental Trading in 1932 as a wholesaler of value-priced novelties. In the 1950s, the company became a major supplier to carnivals, and it expanded in the 1970s after using catalogs to appeal directly to consumers.

Oriental Trading was sold to private equity investors in 2000 and resold to other investors in 2008. Those deals saddled the company with debt that forced it to reorganize in bankruptcy in 2010.

Buffett said Oriental Trading will have a permanent home at Berkshire.

"We are delighted to have them join the Berkshire Hathaway family and continue their quest to make the world more fun," Buffett said.

As with other Berkshire acquisitions, no major changes are planned at Oriental Trading. Current CEO Sam Taylor will continue running the company. Taylor said he's glad to have the financial backing and stability of Berkshire, which he said will allow Oriental Trading to continue growing.

Andy Kilpatrick, the stockbroker-author who wrote "Of Permanent Value: The Story of Warren Buffett," said Oriental Trading should become a stronger company with Berkshire's backing, and Buffett's company will get a modest boost from the deal.

"He seems to have no problem in adding to his operating business segment even in a tough economy," Kilpatrick said of Buffett.

Besides retail firms like Nebraska Furniture Mart and Helzberg Diamonds, Berkshire Hathaway Inc., owns insurers including Geico, the BNSF Railway and major utilities.

It also holds big investments in companies like the Washington Post Co., Wells Fargo & Co., International Business Machines Corp. and American Express Co.

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