Buffett Makes $4.5 Billion Deal With Pritzkers
By MARK MAREMONTDecember 26, 2007; Page A1
Warren Buffett agreed to pay $4.5 billion to buy the majority of an industrial conglomerate from Chicago's Pritzker family, choosing to invest in products like plumbing pipes and railroad tank cars as Asian investors pour billions into U.S. financial institutions.
Mr. Buffett's Berkshire Hathaway Inc. is buying 60% of Marmon Holdings Inc., which has about $7 billion in annual revenue. Berkshire will purchase the rest of the company in stages by 2014, with the final price determined by Marmon's future performance.
According to Mr. Buffett, the deal is Berkshire's largest-ever acquisition outside of the insurance industry. It reflects his fondness for unflashy businesses that deliver steady and strong cash flow, and feature high barriers to entry. Berkshire Hathaway already owns a host of industrial businesses including Johns Manville, a building-products company, and Iscar Metalworking Cos., an Israeli tool maker in which Berkshire took an 80% stake last year for $4 billion.
Berkshire has been rumored as a potential buyer of troubled assets on sale around the world, as financial institutions cope with the fallout of the U.S. mortgage bust. With more than $45 billion in cash on its balance sheet and a triple-A credit rating, Berkshire could easily buy a stake in a big bank, brokerage or other hard-hit financial firm.
Wednesday, December 26, 2007
Reverse Mortgages
A Way for Older Homeowners To Back Out of a Bind
Some Find Banks Are Willing To Accept Reverse Mortgages To Retire Troubled Loans
By KELLY GREENE December 26, 2007; Page D1
Reverse mortgages used to be a way for homeowners to get extra cash during retirement. Now they're also being used for a more-pressing purpose: helping people who are struggling to meet payments on high-interest-rate loans to keep their homes.
The strategy, which is relatively novel but gaining popularity among legal-aid attorneys and housing advocates around the country, calls for persuading lenders to take the cash generated by a reverse mortgage in lieu of foreclosing on older homeowners.
With a reverse mortgage, the bank makes payments to the homeowner instead of the homeowner making payments to a bank. The loan is repaid, with interest, when the borrower sells the house, moves out permanently or dies. The products are complex and have high fees -- typically about 7% of the home's value -- and they make it difficult for homeowners to leave the property to their heirs. But they may be the best option for people who have built up equity in their home and would otherwise lose it. - From WSJ Dec 26, 2007.
Some Find Banks Are Willing To Accept Reverse Mortgages To Retire Troubled Loans
By KELLY GREENE December 26, 2007; Page D1
Reverse mortgages used to be a way for homeowners to get extra cash during retirement. Now they're also being used for a more-pressing purpose: helping people who are struggling to meet payments on high-interest-rate loans to keep their homes.
The strategy, which is relatively novel but gaining popularity among legal-aid attorneys and housing advocates around the country, calls for persuading lenders to take the cash generated by a reverse mortgage in lieu of foreclosing on older homeowners.
With a reverse mortgage, the bank makes payments to the homeowner instead of the homeowner making payments to a bank. The loan is repaid, with interest, when the borrower sells the house, moves out permanently or dies. The products are complex and have high fees -- typically about 7% of the home's value -- and they make it difficult for homeowners to leave the property to their heirs. But they may be the best option for people who have built up equity in their home and would otherwise lose it. - From WSJ Dec 26, 2007.
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