Warren Buffett had tried to buy home lender Residential Capital from Ally Financial Inc. before it was placed in bankruptcy, Bloomberg reported, quoting three people familiar with the matter.
However, Ally declined the offer as it believed the mortgage unit was better protected from future liabilities through a bankruptcy filing and sale.
Buffett's Berkshire Hathaway Inc. (BRKa,BRK-A: Quote,BRK-B: Quote) was not going to pay almost anything upfront for the assets, but would have assumed potential liabilities like litigation costs.
The billionaire investor had assigned Ted Weschler, a former hedge-fund manager, for talks regarding the deal. Buffett did not want a bankruptcy filing for ResCap as Berkshire Hathaway had unsecured debt in the home lender.
ResCap focused primarily in the residential real estate market. Ally said on May 14 that the mortgage subsidiary was filing for Chapter 11.
Ally CEO Michael Carpenter said then, "The action by ResCap will enable Ally to achieve a permanent solution to its legacy mortgage risks and put these issues behind us."
Ally will make a cash contribution of $750 million to the ResCap Chapter 11 estate upon confirmation of the plan.
The report added that Buffett missed a chance to buy ResCap's home-loan origination business and mortgage-servicing assets on $374 billion of loans. Nationstar, majority-owned by Fortress, has agreed to acquire these assets.
Thursday, BH Media Group, a unit of Berkshire, agreed to buy all newspapers, except the Tampa group, from Media General Inc. (MEG) for $142 million in cash.
BRKA closed on Thursday at 120,850, down 0.78 percent, from the previous close.
| || |
| To receive FREE breaking news email alerts for Berkshire Hathaway Inc. and others in your portfolio|
by RTT Staff Writer
For comments and feedback: firstname.lastname@example.org