Berkshire Hathaway Executes $4.5 Billion Buyout of Marmon
Deal, announced on Christmas Day, will be completed in two stages
December 26, 2007
Berkshire Hathaway has agreed to acquire a majority stake in Marmon Holdings for $4.5 billion, purchasing the stake from trusts of the famed Chicago Pritzker family.
Under terms of the agreement, announced on Christmas Day, Berkshire will initially buy 60% of Marmon then purchase the remaining 40% of the business in the next five to six years through a deal with an earn-out provision.
The acquisition by Omaha, Neb.-based Berkshire is the result of an effort that started six years ago when Marmon appointed John Nichols as chief executive, according to Tom Pritzker, the target company’s chairman since 2002. “We brought John Nichols in as CEO and began rebuilding Marmon's existing lines of business. Berkshire Hathaway’s transaction is being done in the context of the previously reported restructuring of our family business interests.”
Nichols succeeded his position as CEO of Marmon to Frank Ptak in 2006.
The Pritzker family took control of Marmon in 1953 when brothers, Jay and Robert Pritzker, purchased the then-small Ohio manufacturing business. The privately held company has since grown to become a $7 billion-in-revenue international business comprised of more than 125 manufacturing and service businesses, operating in a wide array of industries, employing 21,000 employees that are spread between more than 250 manufacturing plants, distribution centers and service facilities in North America, China, Europe and the UK.
While additional financial figures were not released, the acquirer said Marmon’s operating income more than tripled from between 2002 to 2007.
Marmon, meanwhile, will distribute cash and assets to shareholders before the deal’s closing, which is expected to occur in the first quarter of 2008.
Latham & Watkins attorneys Michael Pucker, Ted Keim, Stephen Bowen, Zachary Judd, Ashran Jen, Diana Doyle, Robin Struve, Cary Perlman, Marc Williamson and Bruno Lebrun are serving as counsel to the Pritzker Family.
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