Buffett Makes $4.5 Billion Deal With Pritzkers

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.