Why Berkshire Hathaway is betting nearly $1 billion on Bending Spoons

Warren Buffett is the former CEO and chairman of Berkshire Hathaway.

Paul Morigi/Getty Images for Fortune/Time Inc Berkshire Hathaway is set to invest $330 million in Bending Spoons, adding to its previous $600 million.

Warren Buffett's storied conglomerate is poised to hold a 4% stake in the owner of AOL and Vimeo.

Berkshire's wager is a surprise, but there's some DNA in common with Bending Spoons.

Berkshire Hathaway 's latest bet isn't a no-brainer or a head-scratcher; it's somewhere in between.

What's the deal? Berkshire — which has seen Warren Buffett retire as CEO and chairman since the turn of the year — has agreed to invest $330 million in Bending Spoons, on top of a $600 million injection when the Italian tech conglomerate went public in July, giving the Nebraska behemoth a 4% stake.

Bending Spoons disclosed Berkshire's backing in a press release on Wednesday, catapulting its stock up nearly 50% over two days, a phenomenon known as the " Buffett effect ." The stock fell on Friday, but still ended the week more than 20% above Monday's opening price.

Berkshire has agreed to buy 10 million shares for $33 each, around a 13% discount to Bending Spoons ' closing price of $38 on Tuesday, the day before the deal was announced.

CEO and cofounder Luca Ferrari described Berkshire in the press release as "among the finest and most respected capital allocators in the world," and a "longstanding inspiration" for Bending Spoons.

Neither company responded to requests for comment from Business Insider.

What is Bending Spoons? Bending Spoons acquires digital businesses, transforms and optimizes them to increase profits, then reinvests those earnings in further acquisitions.

It has been pursuing that strategy for more than a decade and has never sold a material business.

Its acquisitions to date include AOL, Evernote, Vimeo, Eventbrite, and WeTransfer.

Ferrari's company said in the press release that it "strives to envision the most successful version of an acquired business," then works to close the gap between that vision and reality "as quickly and completely as possible." Bending Spoons said that typically involves "deep" transformation such as "reorganizing teams, overhauling technology, redesigning user interfaces, accelerating product development, and enhancing marketing and monetization," often with a good dose of AI.