Category: Acquisitions

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Acquisitions MiTek

MiTek Acquires Sales Simplicity

(BRK.A), (BRK.B)

Berkshire Hathaway’s MiTek Industries, Inc. has acquired Sales Simplicity Software, a leader in CRM, sales automation, dynamic content management, and reporting for the home building and real-estate sectors. The company is headquartered in Chandler, Arizona, and no terms were disclosed.

“The acquisition of Sales Simplicity Software is yet another step that MiTek is taking to enrich its offering of operations workflow solutions for residential production builders,” stated Tom Manenti, Chairman and CEO of MiTek. “With this acquisition of Sales Simplicity Software, along with our 2015 acquisition of BuilderMT, and previous acquisitions of Simpad and Kova, we offer a truly unique and expansive selection of software for production builders. Sales Simplicity Software has an excellent user-base among production builders and integration into BuilderMT, which MiTek will further strengthen. MiTek will continue to offer solutions and resources to our customers that are second to none.”

As part of this acquisition, Tom Gebes, the current president of BuilderMT, will also become president of Sales Simplicity and work to tighten the integration between the two companies, as they move toward working together as one system. Customers will still be able to purchase BuilderMT or Sales Simplicity as stand-alone solutions. Sales Simplicity will remain in Chandler, Arizona, with no changes to employee base, and Barry Forbes, the founder of Sales Simplicity, will retire in early 2016.

About Sales Simplicity

Sales Simplicity is the creator and marketer of leading sales automation, content management, lead management, eMarketing and reporting management tools for new single-family, semi-custom and custom homes; condo, multi-family, realtor and senior living providers. Sales Simplicity’s highly intuitive CRM system offers features similar to SalesForce.com, but Sales Simplicity’s CRM is tightly integrated into Sales Simplicity’s award-winning, Cloud-based, sales-automation platform, and the entire system has been specifically envisioned for home builders. Since Sales Simplicity is already linked deeply into Facebook, Twitter, and other social media systems, users of Sales Simplicity’s new CRM features will immediately benefit from single-platform, dash-board-driven campaign management tools linked directly to web analysis, eMarketing, lead management, follow-ups, and new prospects.

About MiTek

MiTek is a diversified global supplier of software, engineered products, services, and equipment to the residential, commercial, and industrial, construction sectors.

Bolt-On Acquisitions Continue to Power Berkshire’s Growth

© 2016 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Categories
Acquisitions BH Media

BH Media Group Adds Fredericksburg Newspaper to Virginia Print Media Outlets

(BRK.A), (BRK.B)

Berkshire Hathaway’s BH Media Group has acquired The Free Lance-Star, a newspaper serving Fredericksburg, Virginia. The paper was purchased from the investment firm Sandton Capital Partners, which picked up the paper through bankruptcy in June 2014.

BH Media Group acquired The Free Lance-Star daily newspaper, its website fredericksburg.com, the Star Weekly, and a commercial printing facility.

Published for more than 140 years, The Free Lance-Star has a Monday through Friday daily circulation of 36,991, Saturday circulation of 40,685, and Sunday circulation of 43,070. In addition, the Star Weekly newspaper has a total circulation of 79,400.

The acquisition gives BH Media Group a total of 37 newspapers, publications and websites serving Virginia.

In total, BH Media Group owns 73 newspapers and other titles located in 10 states, including: Alabama, Florida, Iowa, Nebraska, New Jersey, North Carolina, Oklahoma, South Carolina, Texas and Virginia. They also own and operate WPLG-TV, an ABC affiliate in Miami, Florida.

© 2016 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Categories
Acquisitions Berkshire Hathaway Automotive

Special Report: Did CarMax Just Make a Berkshire Hathaway Automotive Acquisition More Likely?

(BRK.A), (BRK.B)

CarMax, the no haggle, used car retailer with 150+ locations nationwide,
has greatly increased its presence in Boston. The move creates competitive pressures for all of Boston’s car dealers and brings up a big question.

Is it now likely that the Herb Chambers group of auto dealerships will become part of Berkshire Hathaway Automotive (BHA)?

Herb Chambers Companies, a privately-held, Boston-based dealership group with 55 total dealerships, looks to be the perfect fit for BHA, and its owner could be ready to sell. Herb Chambers could be all the more ready now that CarMax has expanded from a single outlet in the town of North Attleboro, Massachusetts, to adding two new outlets in the towns of Norwood and Danvers.

The Norwood store features 40,000 square-feet of showroom and service area, and the Danvers store features 20,000 square-feet of showroom and service area.

And There’s More Coming to Boston

A CarMax a little further west in the town of Westborough is scheduled to open in the summer of 2016, so the competition will only continue ratcheting up in the greater Boston area.

CarMax is not just another dealership group. It has muscle. It’s  a national used car power house that’s grown to be a member of the FORTUNE 500 and the S&P 500.

According to the company, during the 12 months ending February 28, 2014, nationally CarMax retailed 526,929 used cars and sold 342,576 wholesale vehicles at in-store auctions.

Who is Herb Chambers?

Herb Chambers is a former copier salesman who has spent the past thirty years building a top dealership group that is the 12th largest privately-held auto group in the nation.

Would he sell?

Chambers has already stated that he would sell if the price is right, and he tips his hat to Warren Buffett’s $4.1 billion Van Tuyl Group acquisition for boosting his personal net worth to some $1.5 billion, as valuations jumped throughout the whole sector.

Auto sales are currently at record levels and private equity money, including financier George Soros, has been looking to get in.

Opening the Door to Berkshire

Over the years, Chambers has turned down offers from AutoNation Inc. and Penske Automotive Group. Now, with valuations high for auto groups, there may be no better time to cash out.

Like Buffett, Chambers is a Shrewd Guy

Herb Chambers is certainly not afraid to sell when the time is right. Three decades ago he founded A-Copy America, and after merging it with Ikon Office Solutions, he cashed out with a big sale to Ricoh. It was a shrewd move, and Chambers has proved to be a shrewd guy who currently sells more cars than anyone else in New England.

Now, with competition heating up in the Boston market, the perfect exit strategy for Herb Chambers this time could involve Berkshire. After all, Warren Buffett’s already let be known that his goal is to make BHA much bigger.

Buffett wrote in his 2015 Berkshire Hathaway Chairman’s Letter that “…if we can buy dealerships at sensible prices – we will build a business that before long will be multiples the size of Van Tuyl’s $9 billion of sales.”

A deal with Herb Chambers could be just the way to do it.

© 2015 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

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Acquisitions Berkshire Hathaway Automotive Berkshire Hathaway Energy Duracell Minority Stock Positions NetJets Precision Castparts Warren Buffett

Commentary: A Christmas Wish List for Under Warren Buffett’s Tree

(BRK.A), (BRK.B)

Here’s a Christmas wish list for presents under Warren Buffett’s tree. The items are big, so we’ll fit them under Charlie Munger’s tree as well.

1. Precision Castparts: There’s nothing like getting the present you bought for yourself. The pending acquisition the aerospace manufacturer looks like the gift that will keep on giving.  Demand for new airplanes will double over the next 15 years, as aging fleets are retired and millions more people start to fly regularly in India and China.

2. Duracell: Because everyone likes to get cash for Christmas! With the Duracell acquisition set to close in February 2016, Berkshire will gain not only the leading alkaline battery manufacturer, but will also get a company recapitalized by P&G with $1.7 billion in cash, and will get huge tax savings as it trades in its appreciated P&G stock for the battery maker.

3. More German Companies: Warren Buffett’s admiration for the German economy was on full display at the Berkshire Hathaway annual meeting in May 2015. This past February, Berkshire Hathaway struck a deal to acquire Devlet Louis Motorradvertriebs, a mail-order and retail chain selling motorbike clothing and accessories. The move, according to Buffett, was just the first small acquisition in a country with a strong economy and work ethic. And, with a rising dollar and a shaky euro, will more German companies fit under Berkshire’s tree?

4. Lots of Natural Gas: As the world dumps coal and moves to cheaper and cleaner forms of energy, Berkshire’s on the verge of striking it rich in Australia’s gas fields. Natural gas prices may be cratering now, but it never hurts to have a majority share of four trillion cubic feet of gas-in-place (yes, trillion) in Australia’s Whicher Range and Wonnerup gas fields. A new test well hopefully will bring good news in the new year.

5. More Auto Dealers: When Berkshire Hathaway jumped into the auto retailing business in March 2015, with its acquisition of the Van Tuyl Group, it added a whole new line of business to the mega-conglomerate. The Van Tuyl Group was the largest privately owned auto dealership group in the U.S., and Buffett promised that this was just the start of building a major auto-retailing empire. So, will Herb Chambers Companies, a privately-held, Boston-based dealership group with 55 total dealerships, be the perfect fit for Berkshire Hathaway Automotive? Its owner looks ready to sell. Time to wrap this one up and put a bow on it.

6. Happy Pilots at NetJets: Forget your crazy uncle, there’s nothing like having a happy family at Christmas. This holiday, NetJets’ pilots and its flight attendants will be celebrating their new contracts that bring substantial raises. Hopefully, they’ll use it to buy some of Berkshire’s fine products. How about some jewelry from Borsheims? It’s been a good year. Go for it!

7. More Solar & Wind! Berkshire’s quickly becoming the leading energy producer and distributor of solar and wind energy. This year saw major wind farm projects, including a new wind farm site in Adams County, Iowa, which will produce 162 megawatts of additional wind generation capacity in Iowa. Berkshire’s aggressive expansion of it solar power farms saw its Topaz Solar Farm in San Luis Obispo County, California, become one of the largest photovoltaic solar farms in the world. And, there’s plenty of room under the tree for more such projects, which not only bring cheap energy, but also lower environmental costs as they are emissions free. With the cost of solar energy dropping fast, Berkshire’s been signing amazing deals that are a Christmas present now and for decades to come. In Nevada, it has contracted to buy electricity from First Solar’s soon to be built Playa Solar 2 at the astoundingly low rate of only 3.87 cents a kilowatt-hour, and the deal is a fixed rate contract for twenty years.

8. More Deals with 3G Capital: Because everyone likes surprises. 3G’s aggressive acquisition strategy has been the perfect partner for Berkshire’s cash. 3G brings not only the aggressive cost-cutting (aggressive is an understatement) that is bringing legacy companies such as Kraft-Heinz into the 21st century, but also gives excellent financing and equity opportunities. 3G’s merger of Burger King with Tim Hortons brought Berkshire fat interest payments and made Berkshire a minority owner of the newly formed Restaurant Brands International. Surely, there are more deals to be done.

Hard to fit this all under the Christmas tree? Berkshire’s a big company. There’s room for all this and more.

Merry Christmas everybody!

–David Mazor

© 2015 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Categories
Acquisitions BNSF

Berkshire Open to Merging BNSF with Norfolk Southern or CSX

(BRK.A), (BRK.B)

With Norfolk Southern the subject of repeated bids from Canadian Pacific, Berkshire Hathaway is considering jumping into the bidding too. And, while everyone has been focusing on Norfolk Southern, BNSF has interest in CSX as well.

“CSX would be at an enormous (competitive) disadvantage and so there would be another step towards consolidation,” Matt Rose explained to Reuters.

As for Norfolk Southern, the railroad rejected Canadian Pacific’s initial offer in early November and its most recent offer last week. There are significant questions on whether regulators would approve the deal, even if the price was right.

Grossly Inadequate

“Canadian Pacific’s revised, reduced proposal is not only less than what the Norfolk Southern board has already found to be grossly inadequate, it is even more uncertain and risky given the decrease in the cash consideration,” said Chairman, President and CEO James A. Squires in a statement released by the railroad. “In addition to being grossly inadequate, the proposal is based on a voting trust structure that we reviewed and do not believe would be approved by the STB. Yesterday we released a white paper by two former STB chairmen who believe that the STB would not approve any voting trust structure because there is no basis to determine that it would be in the public interest.”

STB Approval?

Norfolk Southern’s white paper by former Surface Transportation Board commissioners Francis Mulvey and Charles Nottingham concluded that, “As simple background, rail carriers cannot assume control of another carrier without prior STB approval. The STB’s approval process can last between 19 and 22 months. Current STB regulations, adopted in 2001, set a high bar for approval of a proposed major merger and related voting trust based on an untested public interest standard. In our expert opinions, the STB is not likely to approve CP’s proposed voting trust or the CP+NS merger.”

BNSF Jumps Onboard

BNSF Railway chairman Matt Rose has indicated that BNSF is interested in either Norfolk Southern or CSX depending on the outcome of Norfolk Southern’s status.

“I’ve had general conversations with both of them and told them that we’re going to watch this with interest,” Rose told Bloomberg News.

While the path to North American railroad consolidation is a bit murky, What is clear is that BNSF is unwilling to have the current balance of power in North American freight hauling shift too heavily to any one railroad.

As for a potential price, anything in the $27-$40 billion range is within Berkshire’s means with its cash on hand and strong financing ability. The company is is still in the middle of its $32 billion acquisition of aerospace manufacturer Precision Castparts, but sometimes there is a parade of elephants.

(This article contains updated information from when it was first published.)

© 2015 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Categories
Acquisitions Duracell

Star Wars Ad Campaign Powers Up Duracell Before Shift to Berkshire Hathaway

(BRK.A), (BRK.B)

The force seems to be with Berkshire Hathaway as a major movie tie-in is likely to power up interest in Duracell batteries just as Berkshire takes over the world-leader in alkaline batteries from its previous owner, Procter & Gamble.

Berkshire agreed to acquire Duracell in November 2014 in a tax-free swap of stock and cash that traded Berkshire’s $4.7 billion stake in Procter & Gamble for the Duracell. The battery manufacturer will also be recapitalized by P&G with $1.7 billion in cash.

According to a Duracell official, the deal looks set to conclude in February 2016.

Just two months before the deal finalizes, Duracell has launched its Star Wars “Battle for Christmas Morning” movie tie-in with a big budget TV campaign that was shot on an all-new anamorphic camera lens and aspect ratio that were only used previously on the new Star Wars film.

A Movie Quality TV Spot

The TV spot debuted December 7th and is scheduled to run through December 31st.

Shot by directed by Star Wars fan and director of the Night at the Museum film series, Shawn Levy, the spot features a 14-year old boy and his 9-year old sister entering a limitless world of creativity once Duracell Quantum batteries are inserted into their new lightsaber toys.

The 60-second spot, which features appearances by original Star Wars characters, C-3PO and R2-D2, highlights the power and importance of imagination for the whole family.

“This ad is a whole story within a finite number of seconds; a boy gets a lightsaber on Christmas morning, he pops in his Duracell batteries to power up his toy and suddenly, within the real world, is this injection of make believe and imagination,” said Shawn Levy, director. “It’s really about the transformation from the real into the fantastical and how these little batteries provide the juice for this whole imagined universe and adventure.”

As a promotional partner of Star Wars: The Force Awakens, Duracell collaborated with many of the forces behind Star Wars, including Disney, Lucasfilm, Industrial Light & Magic (ILM) and Skywalker Sound to create an authentic Star Wars experience and bring this action story to life.

The TV spot received expert guidance from famed cinematographer, Daniel Mindel, who was the director of photography on the new Star Wars film, as well as the director of photography on the 2009 film Star Trek and the 2013 film Star Trek Into Darkness.

A Galaxy of Movie Tie-Ins

Star Wars movie tie-ins are ubiquitous as the highly anticipated film has been on manufacturers and retailers minds for the past few years. Disney, which purchased Lucasfilm in 2012, has tied the film to everything from a Darth Vader-black Dodge Viper from Fiat Chrysler to CoverGirl makeup; however, none would seem to be a better fit than Duracell as the power source for galaxy of Star Wars toys and games.

The movie industry is anticipating that Star Wars: The Force Awakens will smash opening day and opening week box office records around the globe when it hits movie theater screens on December 18. The jumbo box office numbers are guaranteed as there are already over $50 million in presold tickets for opening weekend. The big question is will it enjoy a run at the biggest movie of all-time, a record that currently belongs to Avatar, which hit theaters in 2009 and took in $2.788 billion in theaters world-wide

For Berkshire, hopefully it will launch a great sales year as all the Star Wars toys need a constant supply of batteries. While Berkshire likes to own companies for the long term, it never hurts to start a marriage with an interstellar honeymoon.

© 2015 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Categories
Acquisitions Marmon Group UTLX

Berkshire Reveals Price it Paid for GE Railcar Services’ Fleet

(BRK.A), (BRK.B)

The price for Berkshire Hathaway’s acquisition of substantially all of GE Railcar Services’ owned fleet of railroad tank cars has just been revealed.

Berkshire’s Marmon Holdings, Inc. acquired the assets on September 30, 2015, but at the time no price was announced.

In a filing on Friday, November 6, Berkshire revealed that the price was $1 billion.

Approximately 25,000 full-service and net-leased tank cars were acquired in the transaction, and Marmon also will take over certain GE Railcar Repair Services’ repair and maintenance facilities by the end of 2015.

Marmon already owns tank car manufacturer UTLX, which manufactures tank cars and engages in full-service leasing. UTLX furnishes all the services that are normally the responsibility of an owner and backs those services with the necessary specialists to keep fleet records of maintenance, repairs, and other administrative details.

GE is selling its remaining railcar leasing business, General Electric Railcar Services LLC, to Wells Fargo & Co.

© 2015 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Categories
Acquisitions Clayton Homes

Clayton Homes in $50 million Deal to Acquire Chafin Communities

(BRK.A), (BRK.B)

Berkshire Hathaway’s Clayton Homes is acquiring Chafin Communities, a Georgia home builder that builds extensively in northeast Atlanta.

The roughly $50 million acquisition will give Clayton Homes 1,100 building lots.

Chafin Communities’ principals, brothers Eric and Daryl Chafin, are staying on board to head up the new division. The two began working in construction as teenagers and founded their first construction company in 1966. The company’s 25 employees will all become Clayton employees.

Chafin Communities has constructed over 4,500 homes to date, and in 2014 Chafin Builders LLC/Chafin Communities ranked #13 in the Atlanta’s TOP 20 Home Builders List, based on Homes closed in 2013.

© 2015 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Categories
Acquisitions Insurance National indemnity

Berkshire to Acquire Insurance Assets

(BRK.A), (BRK.B)

Berkshire Hathaway’s insurance unit, Tenecom Ltd, a subsidiary of National Indemnity, will acquire the non-life insurance assets of UK insurer Charles Taylor PLC.

Charles Taylor has begun disposing of its non-life insurance assets in order to concentrate on its life insurance business, and Tenecom Ltd will acquire the business assets of both Cardrow Insurance and Beech Hill Insurance.

financial details have been released other than that Charles Taylor will receive a final dividend from Cardrow and Beech Hill when the units are liquidated.

London-based Tenecom was originally known as Yasuda Fire And Marine Insurance of Europe, before changing its name in 2001.

© 2015 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Categories
Acquisitions Berkshire Hathaway Automotive Commentary

Commentary: Is a Boston Dealership Group a Likely Acquisition for Berkshire Hathaway Automotive?

(BRK.A), (BRK.B)

When Berkshire Hathaway jumped into the auto retailing business in March 2015, with its $4.1 billion acquisition of the Van Tuyl Group, it added a whole new line of business to the mega-conglomerate.

The Van Tuyl Group was the largest privately owned auto dealership group in the U.S., and instantly made the newly christened Berkshire Hathaway Automotive Group the fourth largest dealership group in the U.S.

The Van Tuyl acquisition was just the beginning, Warren Buffett noted in his 2015 Berkshire Hathaway Chairman’s Letter, stating, “…if we can buy dealerships at sensible prices – we will build a business that before long will be multiples the size of Van Tuyl’s $9 billion of sales.”

A Plum Waiting to be Picked

Now, a plum dealer group looks ready to sell and Berkshire Hathaway Automotive could be the perfect buyer.

Herb Chambers Companies, a privately-held, Boston-based dealership group with 55 total dealerships, looks to be the perfect fit for Berkshire Hathaway Automotive, and its owner looks ready to sell.

Herb Chambers, a former copier salesman who has spent the past thirty years building a first class dealership group that is the 12th largest privately held auto group in the nation, has already stated that he would sell if the price is right.

He also credits Warren Buffett’s Van Tuyl Group acquisition for boosting his personal net worth to some $1.5 billion, as valuations jumped throughout the whole sector, and private equity money, including financier George Soros, began looking to get in.

In the past, Chambers has turned down offers from AutoNation Inc. and Penske Automotive Group, but with valuations high for auto groups, there could no better time to cash out.

Berkshire Hathaway never likes to get into bidding wars, so what would make Chamber choose Berkshire?

With Berkshire Hathaway Automotive he could still remain in charge of his baby, just like Larry Van Tuyl, who became chairman of Berkshire Hathaway Automotive.

Unlike most private equity investors that quickly replace the existing leadership, Berkshire Hathaway looks as much as possible to keep talented managers at the helm. It was that arrangement that attracted Larry Van Tuyl to Berkshire. As Warren Buffet explained:

“Larry Van Tuyl, the company’s owner, and I met some years ago. He then decided that if he were ever to sell his company, its home should be Berkshire.”

Chambers Knows When to Sell

Herb Chambers is certainly not afraid to sell when the time is right. Three decades ago he founded A-Copy America, and after merging it with Ikon Office Solutions, he cashed out with a sale to Ricoh. It was a shrewd move, and Chambers has proved to be a shrewd guy who currently sells more cars than anyone else in New England.

Could the perfect exit strategy for Herb Chambers this time involve Berkshire?

Could be. After all, Chambers does have a photo of him and Buffett on the wall of his office.

© 2015 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.