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Buffett buys Fruit of Loom
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November 2, 2001: 12:30 p.m. ET
Berkshire Hathaway to buy bankrupt apparel company for $835 million.
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NEW YORK (CNNmoney) - Only a slim chance exists for other companies to swoop in and outbid Warren Buffett's Berkshire Hathaway, which has agreed to buy Fruit of the Loom Inc., a source familiar with the negotiations said.
Berkshire said Thursday it will acquire substantially all of Fruit of the Loom's basic apparel operations for $835 million in cash. The purchase price is subject to "significant reduction for certain liabilities as well as adjustment upward or downward depending on working capital levels."
"We've agreed to buy Fruit of the Loom for two major reason: the strength of the brand and the managerial talent of (Chief Executive Officer) John Holland," Buffett said.
Chicago and Cayman Islands-based Fruit of the Loom (FTLAQ: Research, Estimates) filed for Chapter 11 bankruptcy protection in December 1999. The 130-year old company is one of the largest makers of T-shirts and underwear in the United States.
Fruit of the Loom now will seek approval from bankruptcy court for an auction where higher or better offers will be considered. Berkshire Hathaway outbid Russell Corp together with Blackstone Group, as well as Toronto-based Gildan Activewear Inc., which was partnering with Texas Pacific Group, for the bankrupt apparel maker.
However, chances of a higher offer emerging from the rejected suitors is unlikely. "The chances of getting back in are less than remote," a source familiar the negotiations said.
Fruit of the Loom's purchase price has always been around $800 million. "The price doesn't seem to have gotten any better, so why get back in when conditions have deteriorated?" the source said.
Fruit of the Loom and Berkshire expect the deal to close in the first quarter of 2002.
Lazard LLC advised Fruit of the Loom. 
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