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Buffett to buy Manville
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December 20, 2000: 11:40 a.m. ET
Berkshire Hathaway agrees to buy building products maker for $1.9B
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NEW YORK (CNNfn) - Johns Manville Wednesday agreed to be acquired by Warren Buffett's Berkshire Hathaway Inc. for about $1.9 billion in cash, less than two weeks after the building products company called off a $2.4 billion buyout by an investor group.
Under the merger agreement, Berkshire Hathaway will pay $13 a share in cash for Manville, the No. 2 U.S. insulation maker, a 21 percent premium over Manville's closing share price Tuesday.
The announcement comes after Manville ended a deal to be bought by a group led by Hicks, Muse, Tate & Furst and Bear, Stearns & Co.
 "We are pleased about the opportunity to own a company with such strong market positions, leadership, and financial performance," said billionaire investor Buffett in a statement. "Johns Manville fits well in the Berkshire family of successful enterprise with global brand recognition."
The Manville Personal Injury Settlement Trust, which owns 76 percent of Johns Manville, agreed to tender its shares. The deal also includes $300 million in debt.
The trust was created in 1988 to handle claims due to the company's past manufacture of asbestos. The liability from asbestos had forced Johns Manville into reorganization under bankruptcy protection laws in 1982. The reorganization and creation of the trust was approved by a federal bankruptcy court in 1986.
Alice Schroeder, an analyst who follows Berkshire Hathaway at Morgan Stanley Dean Witter, said the acquisition seems to be following a theme.
"Berkshire have been on an acquisition spree of companies that make products similar to this," Schroeder said.
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 WHO IS JOHNS MANVILLE?
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Based in Denver
Founded 142 years ago
No. 2 insulation maker
1999 sales of $2.2B
9,700 employees
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Schroeder said Berkshire is paying nine times 2001 earnings, according to First Call, which is a "pretty cheap price" for a company with reasonable growth.
"This looks like a classic value investment for a business that is stable and predictable," she said.
In November, Berkshire bought Benjamin Moore & Co. paints, in September it agreed to acquire carpet maker Shaw Industries, and in June it bought Justin Industries, a leading brick maker.
The deal is subject to government and court approval. Berkshire Hathaway will start its tender offer no later than Jan. 3, 2001.
Manville announces buyback
Manville also announced a $135 million stock buyback which should increase 2000 earnings by 25 cents per share. Analysts polled by First Call expect the company to earn $1.39 for the year ended December 2000.
Trust Chairman and Managing Trustee Robert A. Falise said he was confident of court approval of the move and that it would increase liquidity and diversify the trust's assets.
Denver-based Johns Manville (JM: Research, Estimates) had revenue of about $2.2 billion in 1999 and employs about 9,700 people.
Shares of Manville rose $2.12 to $12.88 in morning trading Wednesday. Shares of Berkshire Hathaway (BRK.A: Research, Estimates) fell $400 to $67,500. 
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