Deutsche Bank just sort of kind of compared Warren Buffett to Gordon Gekko.
And in a note to clients on Friday, Deutsche Bank compares Buffett’s deal to acquire Kraft to something that you might imagine Gekko would do.
Or at least, the firm doesn’t think people would be quite so nice about the deal.
Here’s Deutsche Bank:
Thought experiment: how would this “merger” have been reported if you swapped the popular, cuddly Warren Buffet with Gordon Gekko? No-doubt critics would have recalled his audacious acquisition of Heinz two years ago. Next the sad tales of fired workers and shuttered factories in order to recoup the 40 per cent he paid above the decade average sector ev/ebitda multiple. Having squeezed Heinz’s ebitda margin to 28 per cent (the global sector average margin is just 11 per cent) the story turns to Gordon’s attack on Kraft. Goosed earnings on a 14 times multiple unfairly justifies taking control of the merged company (Kraft makes almost twice the revenues and more profit). Questions would have swirled around the sustainability of Heinz’s opex cuts and the fate of Kraft’s 22,000 employees. But it’s Warren, not Gordon — so such a narrative is unimaginable.
It’s not totally clear if Deutsche Bank is condemning Buffett’s deal, or applauding his tactics, or pointing out the hypocrisy of media coverage.
But what is clear is that Buffett just got put very, very close to Gekko, who came to personify all that was wrong with Wall Street in the 1980s and in many ways still does.