Berkshire Hathaway Inc. to acquire the Johns Manville Corp. for 0.91 times revenue

Weekly Corporate Growth Report, Jan 8, 2001

The Deal: Warren Buffett's Berkshire Hathaway Inc. has agreed to purchase the Johns Manville Corp. for $1.96 billion in cash. According to the terms of the deal, Berkshire will also assume $300 million in Manville debt. Manville spent six years in Chapter 11 bankruptcy court seeking protection from liability for asbestos, it's top product until it was linked with cancer. After the news of the transaction was announced, shares of Berkshire fell $1,400 to $66,500, while Manville shares jumped $2.13 to close at $12.88.

Discussion: The Johns Manville Corp. is the nation's No. 2 maker of building insulation. Manville also produces insulating fibers and foams for cars, planes and boats; air-filtration media for respirators and vacuum bags; roofing systems and other industrial and residential building materials. Manville is the No. I maker of fiberglass wall fabric worldwide and operates nearly 60 manufacturing facilities in Asia, Europe and North America. A liability trust fund that owns 76 percent of Johns Manville is braced to pay millions in asbestos injury claims over the next few decades.

Berkshire Hathaway Inc. primarily operates property/casualty insurance and reinsurance through subsidiaries National Indemnity, GEICO and reinsurance-giant GeneralCologne Re, among others. Berkshire also owns stakes in gems (Helzberg Diamonds), candy (See's), pilot training (FlightSafety International) and shoes (H.H. Brown and Dexter). The firm also has significant stakes in American Express, Coca-Cola, Gillette, The Washington Post Company, Wells Fargo and MidAmerican Energy.