Buffett Defends AmEx CEO's Decision to End Costco Deal -CNBC

Investor Warren Buffett on Monday defended American Express Co. (AXP) Chief Executive Officer Kenneth Chenault's decision last year to end the credit card company's 16-year relationship with Costco Wholesale Corp. (COST).

Mr. Buffett, in an interview on CNBC, said the loss of the Costco account "was a significant item," but said he was aware of the financial details involved in the negotiations and agreed with Mr. Chenault.

"I concur entirely with (AmEx) walking away" from the Costco business, said Mr. Buffett, the chief executive at Berkshire Hathaway Inc. (BRKA, BRKB). "You have to be able to walk away from an acquisition. You have to be able to walk away from a business deal.

"It may be very tough sometimes, but if you aren't willing to walk away, you're going to get pushed around pretty dramatically," he said.

However, Charlie Munger, Berkshire's vice chairman as well as a board member at Costco, had a different opinion on the AmEx decision regarding Costco.

"I would have made the opposite decision," Mr. Munger said of the AmEx choice. "Costco is so powerful," he explained to CNBC, "they (AmEx) should have thrown away the rule book. But that's just my opinion."

For his part, Mr. Buffett said AmEx has a "very strong franchise" with the amount of dollars spend per AmEx card far higher than that of Visa Inc. (V) or MasterCard Inc. (MA). "I feel good about it."

CNBC website: www.cnbc.com/

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(END) Dow Jones Newswires

May 02, 2016 10:08 ET (14:08 GMT)

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