Berkshire Hathaway and Graham Holdings announced a deal Wednesday that will end a four-decade-old marriage between a onetime media giant and one of the world’s savviest investors.
Warren Buffett’s Berkshire Hathaway said it would swap 1.6 million of its shares of Graham Holdings, worth more than $1.1 billion, for Miami television station WPLG and an undisclosed amount of cash and its own stock.
The exchange of assets will end Berkshire Hathaway’s position as a major stable investor in Graham Holdings, known as The Washington Post Co. before it sold the flagship newspaper to Amazon founder Jeffrey P. Bezos. Berkshire Hathaway chief executive Buffett, a confidant and business adviser to the late Katharine Graham, stepped down as a member of The Post’s board of directors in 2011.
The deal would also help both companies to sidestep taxes. Berkshire’s shares of Graham Holdings, Graham’s shares of Berkshire, and the Miami television station have all appreciated sharply in value since they were acquired. But the federal tax code treats a swap of assets such as this one as a non-taxable exchange and not subject to taxes that would be levied in a simple sale.
The Miami television station was purchased by The Post in 1969 and renamed in memory of Philip L. Graham, Katharine Graham’s husband and father of Graham Holdings chief executive Donald E. Graham. An affiliate of Walt Disney Co.’s ABC, it is one of half a dozen profitable local broadcast stations owned by Graham Holdings. The Miami television market ranks as the 16th-largest in the United States, according to data from Nielsen.
Buffett’s Berkshire began buying shares in what was then The Post Co. in 1973, and analysts have estimated that he paid 1 percent of what the stock is worth today. Berkshire Hathaway would still own about 127,000 shares of Graham Holdings, according to figures in the Bloomberg News database.
Graham Holdings stock jumped more than 3 percent and closed Wednesday at $730.79 a share, up $21.63.
Graham Holdings also owns stock in Berkshire Hathaway, about $400 million worth of which will be included in the exchange, according to the term sheet filed with the Securities and Exchange Commission. The filing said that Graham Holdings owns 2,214 of Berkshire’s A class shares, worth about $416 million at the current market price, and 424,250 of Berkshire’s B class shares, worth about $53 million.
“While this transaction will greatly reduce our position in Graham Holdings, our admiration for the company and its management is undiminished,” Buffett said in a joint statement.
“Warren Buffett’s 40-year association with our company has been extremely good for our shareholders. Naturally, the deal that we have put together is one that will be good for both companies,” Graham said.