Little has been written locally about the recent announcement that Procter & Gamble will purchase another familiar household giant, Gillette (World Class Brands, Products and People).

Even in a stock purchase worth $57 billion, the largest ever mergers and acquisitions don?t seem very much to write home about, and then again these are not exciting companies.

These are not hi-tech firms, nor are they are intriguing young, alternative life-style-culture firms with genius CEO?s, such as Google. These companies are what they have always been, producers of staples and everyday commodities that we all have used or consumed at some point in our lives. They make things that we need to function effectively (and cleanly) as humans: razors, toothpaste, shampoo, washing detergent, deodorant, pampers, batteries.

As the market value of Gillette soared, its largest shareholder, Warren Buffett and his flagship holding company Berkshire Hathaway Inc (NYSE:BRK/A) made a one-day profit of about $640 million. Berkshire holds 96 million shares of Gillette. Priced at the market close of $50.30 Tuesday February 1, 2005, that?s a cool $4.8 billion! Mr. Buffett, who has always advocated a buy and hold long-term equity philosophy, influenced by his teacher and mentor, Benjamin Graham (the Intelligent Investor 1973), has had the last word again.

Who would have thought that 600 million convertible preferred shares of Gillette acquired in 1989 would have been so profitable? Preferred shares, in their legal form of issuance, do not have the ability to appreciate exponentially over the long-term like common shares. But In converting them in 1991 (after two years of very nice dividends) into 48 million (split-adjusted) common shares, BRK hit the jackpot. The annual compound return for the 16-year holding period works out to about 14 percent on an annual basis. Not bad, for just sitting and watching shaving cream and shareholder value expand.

In the same week, American Express, tired of mediocre results from marketing themselves as a one-stop financial shop, decided to throw in the towel by jettisoning off its financial services division.

As the company with the largest group of experienced financial planner advisors, they?ve decided, or perhaps their customers have decided for them, that this is not their cup of tea. It?s hard to deliver full customer service on a consistent basis even when you specialise, but becoming a leaner organisation focused on credit operations caused the share value to rise also. More good news for Berkshire Hathaway?s holdings of American Express that as of December 31, 2003 (2004 financial statements aren?t available yet) totalled $7.3 billion.

While Berkshire, Mr. Buffett?s company, does not appear to be as interested in owning individual stock positions as they are in owning companies (currently $35 billion in value). Instead, Berkshire has pursued a simple acquisition formula noting that ?the larger the company, the greater their interest, preferably in the $5 billion to $20 billion range. ? And by the way, they prefer to pay cash. Imagine having the confidence to not only make a decision based upon those numbers, but to literally seal the deal on not much more than a handshake.

Their six-point business purchase criteria list (published in the 2003 Berkshire Hathaway Letter to Shareholders) is just that:

1. They want large purchases ? at least $50 million;

2. The business must have demonstrated consistent earnings power ? no future projections wanted;

3. The business must show it is earning good returns on equity, while employing little or no debt;

4. Management in place must know what they are doing (Berkshire does not want to run companies);

5. They like simple business structure ? if there is lots of technology, Berkshire won?t understand it; and

6. They want an offering price ? Mr. Buffett has no time to waste on defining and refining the value of a business for sale.

Amazingly, given that presented list, Berkshire management takes little time to make up their time, customarily about five minutes.

It is more than an understatement to hear that one of the greatest investment minds of the 21st century does not understand technology, yet has the intuition (and foresight to short the US dollar) capitalising on both the upside appreciation in capital markets and the downside slide of the US deficit account.

A review of the list of companies (65, count them) in most recent consolidated financial statement and letter to shareholders for BRK reads just like a day in American Life: shoes, shaving cream, paint, industrial coatings, brick and concrete, insurance, newspapers and books, men?s and women?s apparel, underwear that?s fun to wear, pampers, fine jewellery (and utilitarian watches as well) furniture, groceries, banks, finance products and consumer lending, manufactured homes, transportation equipment leasing, airplane fractional ownership leasing, gas, water and utilities, candies, picture framing products, livestock and agricultural industry products, ice cream and fast food franchises, and kitchen tools and gadgets (the Pampered Chef).

Berkshire Hathaway, for those reading about them for the first time, has never paid a dividend and never had a stock split. Therefore the appreciated gain in stock value since the company started in the late 1960?s, is a documented estimated 230,000 percent (unreal, but true). One share closed today, February 3, 2005 at $90,100 ? out of the reach of the ordinary household, although when Mr. Buffett started all of his investors were just ordinary folks, like you and me. BRK does have a class B share that is currently trading in the $3,000 range.

All this is interesting and entertaining if you go to the Berkshire Hathaway website and spend some reading Mr. Buffett?s letter to shareholders over the years. And of course, it is great for those who do own what has been labelled one of the cheapest mutual funds around.

By I can?t help thinking that the other side of the coin is not so scintillating. Gillette?s deal will eliminate 6,000 jobs and an additional number may be made redundant at American Express. Once, just for once, wouldn?t it be nice to see that these types of giant business deals would be equally as beneficial for all employees as for shareholders.