Berkshire Hathaway to buy Fruit of the Loom for 0.54 times revenue

Weekly Corporate Growth Report, Nov 12, 2001

Featured Transaction

The Deal: Berkshire Hathaway Inc. has agreed to purchase Fruit of the Loom Inc. for $835 million. According to terms of the deal, Berkshire will also assume $1.6 billion in Fruit of the Loom debt. The apparel company is to be purchased out of bankruptcy.

Discussion: Fruit of the Loom's products include undergarments, activewear, casual wear, and children's wear sold under the brand names BVD and Underoos. The company has licensing agreements with Warner Bros., Lucasfilm, and others, to market apparel bearing their characters and trademarks. To cut costs, Fruit of the Loom has closed a number of United States plants in favor of Latin American production.

Berkshire Hathaway 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, Inc.) 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.