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Buffett's latest buy: bricks
June 20, 2000: 10:08 a.m. ET

Value investing guru pays nearly $600M for maker of bricks and boots
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NEW YORK (CNNfn) - Warren Buffett's Berkshire Hathaway Inc. agreed Tuesday to buy Justin Industries, a leading U.S. maker of bricks and other products, for nearly $600 million in cash, the latest move by one of the world's wealthiest investors into a decidedly low-tech industry.

The deal calls for Berkshire to pay $22 a share for the Fort Worth, Texas-based company, which counts among its subsidiaries Acme Brick Co., a leading U.S. maker of face brick. The deal value represents a 23 percent premium above Justin's closing price of 17-7/8 Monday.

Despite watching the value of technology stocks soar in recent years, Buffett has stuck to his affinity for low-tech companies with everyday products that produce sound financial results -- and Justin is no exception. The company, which makes everything from cement to cowboy boots, generated nearly $400 million in revenue last year.

Still, while a boom in the U.S. housing markets has sent its building materials business soaring to new heights, Justin's footwear business -- the company's first line of business when it was founded more than 120 years ago -- has largely been lagging in recent years due to fashion trends away from western wear. Building products now account for roughly two-thirds of Justin's overall sales.

"It is an absolutely first-class business run by first-class people," Buffett said in a statement. "The managers who have produced Justin's outstanding results will continue to run operations from Fort Worth just as they have in the past."

graphicShares of Justin (JSTN: Research, Estimates) jumped 4 to 21-7/8 by midmorning Tuesday, while Berkshire (BRK.A: Research, Estimates) shares rose 300 to 57,200.

John Justin, the company's former chief executive officer who owns about 20 percent of the company, has agreed to vote for the acquisition. Like Berkshire's other companies, Justin would operate as a wholly owned subsidiary and maintain its headquarters in Texas.

The company becomes the third acquisition made by Berkshire Hathaway this year, following its $467 million acquisition of CORT Business Services Corp. and a deal last month for Ben Bridge Jewelers. Buffett also announced that Berkshire - which has purchased stakes in everything from McDonald's Corp. to banks -- would buy a controlling stake in MidAmerican Energy, marking the company's first venture into the power sector. Back to top


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Berkshire Hathaway Inc.

Justin Industries, Inc.

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