Buffett’s Berkshire to Acquire Justin Industries
Warren Buffett, cowpoke?
Berkshire Hathaway Inc. (BRK/B), the holding company of billionaire investor Buffett, agreed Tuesday to buy Justin Industries Inc. (JSTN), a leading U.S. brick maker and the manufacturer of Nocona boots, for $600 million in cash.
Berkshire agreed to pay $22 a share for Justin, a 23% premium to its closing stock price Monday.
“It’s got a clean balance sheet, rising earnings and positive cash flow--all things value investors look for,” Bear Stearns analyst Gar Schneider said of Justin.
However, the company’s footwear business, which represents about 30% of its revenue, hasn’t been profitable for several years, Justin Chairman John V. Roach told Bloomberg News last fall.
The company also makes Justin and Tony Lama boots, as well as Chippewa shoes.
Buffett, chairman of Berkshire Hathaway, said the company can expect autonomy.
“It is an absolutely first-class business run by first-class people,” he said. “The managers who have produced Justin’s outstanding results will continue to run operations from Fort Worth just as they have in the past.”
Justin shares rose $4 to $21.88 on Nasdaq, a 52-week high but still below their all-time peak in the early 1990s. Berkshire rose $5 to $1,853 on the NYSE.
(Bloomberg News)
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