Buffet to buy building product maker Johns Manville
The deal provides that Omaha, Neb.-based Berkshire will pay $13 per share in cash for all of Johns Manville’s shares. With nearly 148 million shares outstanding, that would value Johns Manville at about $1.92 billion. Johns Manville also carries about $300 million in debt.
The offer represents a 21% premium over Johns Manville’s closing price of $10.75 a share on Tuesday on the New York Stock Exchange. Under the terms of the agreement, Johns Manville would become a wholly owned subsidiary of Berkshire Hathaway and will continue to be headquartered in Denver.
The announcement comes a little over a week after two other investment firms dropped their attempted buyout of Johns Manville. Dallas-based Hicks, Muse & Furst Inc. and Bear Stearns & Co. could not reach an agreement on price with the company. They had originally agreed to a $2.4 billion buyout but the investment companies said that the financial projections that had supported the deal later changed.
The merger agreement with Hathaway provides that, no later than Jan. 3, 2001, a subsidiary of Berkshire Hathaway will make a tender offer for all outstanding shares of Johns Manville’s common stock.
Johns Manville’s board of directors has unanimously approved the merger has recommended that shareholders tender their shares in the offer. In addition, the Manville Personal Injury Settlement Trust, which owns approximately 76% of the outstanding common stock of Johns Manville, has agreed to tender its shares.
The trust was created to finance settlement of litigation over the company’s asbestos products. Manville had sought protection under Chapter 11 of the federal bankruptcy laws in 1982 when it was faced with suits from people sickened by exposure to asbestos. It emerged from bankruptcy protection in 1988.
The merger agreement is subject to government and court approval.
Buffett said Johns Manville was a good match for his company. “We are pleased about the opportunity to own a company with such strong market positions, leadership and financial performance,’’ he said.
Johns Manville, a 142-year-old company, had sales of $2.2 billion in 1999. It employs approximately 9,700 people and operates 55 manufacturing facilities in North America, Europe and China.