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Buffett’s Washington Post is buying Forney Corp., a supplier of products for industrial boilers, an usual acquisition for a media and education company

Updated July 18, 2013, 7:35 p.m. ET

Washington Post Diversifies… Into Boilers

Publishing Company Buys Industrial Unit from United Technologies

WILLIAM LAUNDER

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It’s not uncommon for an industrial company to seek some glitz by buying into media and entertainment. Washington Post Co. WPO -0.11% may be the only media company going in the other direction—adding soot and grease. The company on Thursday said it is buying a maker of parts for industrial furnaces from United TechnologiesCorp. UTX +0.48%. The decidedly un-glitzy deal is in keeping with a strategy of investing in companies that have strong earnings potential, said Post Chairman Donald Graham.Washington Post didn’t disclose the price it is paying for Forney Corp., an 86-year-old supplier of parts and systems for industrial utilities like power plants. But Mr. Graham, in an interview, described Forney as a “small acquisition.”

Forney’s specialties include making igniters and flame detectors for industrial-grade fuel burners, a far cry from the newspapers, television and education businesses that account for the bulk of the Post’s businesses. Then again, some of those businesses have seen sharp declines in recent years: Post Co.’s cash cow, the Kaplan higher education unit, and its namesake newspaper each booked operating losses last year.

Last year, the company made a similar tiny diversification with the acquisition of a majority stake in Celtic Healthcare Inc., a provider of hospice and home health-care services. Mr. Graham later told investors Post Co. doesn’t “plan to become a giant in the health-care field. We plan to acquire every time we can [find] well-run businesses that … can contribute some profit meaningfully to the Washington Post Company.”

In the same vein, General Electric Co. GE +0.38% doesn’t need to worry about competition from Washington Post Co. anytime soon. Forney “doesn’t represent a new path” for Post Co., Mr. Graham said.

On Thursday he described Forney as a company with “a long record of profitability, excellent management and a good reputation.”

Owning a range of businesses is a philosophy that bears more than a passing resemblance to that of Warren Buffett, whose Berkshire Hathaway BRKB +0.79% is a big shareholder in Post Co. and who was a longtime board member and remains close to the Graham family.

Mr. Graham played down any similarity but acknowledged that Mr. Buffett’s investing philosophy might have “rubbed off” on everyone who worked with him.

Some investors, at least, appeared unimpressed. Brad Sanfalow, founder of research firm PAA Research LLC, described the deal by Post Co. as an “indictment of their current asset base” and a move “well outside of their core competencies.”

Post Co. shares finished Thursday at $515.50, down 56 cents.

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About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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