Prior to closing of the transaction, Marmon will make a substantial distribution of cash and certain assets to the selling shareholders. The sale of Marmon is being done as part of restructuring of the Pritzker family's business interests. The Pritzker family is best known for starting the Hyatt hotel chain.
The Marmon Group, with collective revenues of about $7 billion, is an international association of more than 125 manufacturing and service businesses that operate independently within diverse business sectors, including Wire & Cable, Transportation Services & Engineered Products, Highway Technologies and Flow Products among others.
Marmon was acquired by two brothers, Jay and Robert Pritzker, in 1953, when it was a small ailing manufacturing operation in Ohio. Jay's son, Tom Pritzker, is currently the chairman of Marmon since 2002, while Frank Ptak is serving as its CEO. Marmon's operating income more than tripled between 2002 and 2007, while its operating margins increased to 12.4% from 4.9% during the period.
Commenting on the deal, Warren Buffett, the chairman and CEO of Berkshire Hathaway said, "Our transaction was done just the way Jay would have liked it to be done - no consultants or studies. After meeting with Messrs. Ptak and Nichols, they were just what I expected from Marmon's impressive record of growth and profitability over the years, and the decision to purchase and work out the details of this transaction was done without delay. I am pleased that over the next five to six years, we will be partnering and working with Tom Pritzker, John Nichols and Frank Ptak in continuing to build Marmon."
Tom Pritzker, the chairman of Marmon said, "This transaction is the culmination of a process that began six years ago. We brought John Nichols in as CEO and began rebuilding Marmon's existing lines of business. Berkshire Hathaway's decision recognizes the fine work of our management team over this period and the transaction is being done in the context of the previously reported restructuring of our family business interests."
During the 1970s, the Pritzkers acquired the Cerro Corp., which had mining, trucking, and real estate operations, and the company was known for some time as the Cerro-Marmon Corp. Marmon sold Cerro's trucking subsidiary, ICX, for $22.6 million. The Marmon Group continued to grow during the 1980s, when annual revenues crossed $3 billion. Its holdings included the Illinois-based Trans Union Corp., a lessor of railroad cars, in addition to Braniff Airlines and the Ticketmaster chain. Marmon spun off Trans Union in 2005.
By the early 2000s, Marmon owned about 150 companies, mostly in the service and manufacturing industries, and had nearly $7 billion in assets. The company employed 30,000 people worldwide at that time, with over 2,500 in the Chicago area. In 2002, Robert Pritzker retired from Marmon after spending 48 years the company's helm at its Chicago headquarters.
Marmon's manufacturing units make medical products, mining equipment, industrial materials and components, transportation equipment, building products and water-treatment products.
The Pritzker clan intends to divide its $15 billion in holdings, including the Marmon Group, among eleven heirs. A lawsuit by two other heirs was settled in January 2005. The breakup of the Pritzker holdings is to be completed around 2015.
In August this year, hotel chain Global Hyatt Corp. said that private investment firm Madrone Capital Partners and entities affiliated with Goldman Sachs Capital Partners (GS | charts | news | PowerRating) agreed to acquire a minority stake in Global Hyatt for a total investment of $1 billion. The company further said that the $1 billion investment would be used mainly to provide liquidity to the Pritzker family that owns the hotel group.
Omaha, Nebraska-based Berkshire Hathaway and its subsidiaries engage in a number of diverse business activities including property and casualty insurance and reinsurance, utilities and energy, finance, manufacturing, retailing and services.
The company has over sixty units with businesses as varied as insurance, restaurants, furniture, clothing, candy companies, natural gas and corporate jet leasing. Berkshire also has significant stakes in Coca-Cola Co., Wells Fargo & Co. and Anheuser-Busch Cos.
For the recent third quarter, Berkshire Hathaway reported a surge in net income to $4.55 billion from $2.77 billion in the previous-year quarter. Net earnings per share for class A equivalent shares climbed to $2,942 from $1,797 in the prior-year quarter. Operating earnings totaled $2.561 billion, in comparison with $2.598 billion in the corresponding period last year. The company reported $29.937 billion in revenue during the third quarter, up from $25.36 billion during the year-ago period.
In August, Berkshire acquired about 10.1 million shares of railroad Burlington Northern Santa Fe Corp. (BNI | charts | news | PowerRating), increasing its stake in Burlington Northern to 14.8%. The company bought about 4.32 million shares on August 23, 2.44 million shares on August 24 and 3.32 million shares on August 27.
BRKA closed Monday's regular trading at $137,980, up $3,980 or 2.97% on a volume of 36,000 shares. In the 52-week period, the stock has been trading in a range of $103,800-$151,650.
BRKB closed Monday's regular trading at $4,540.00, up $65.00 or 1.45% on a volume of 1.49 million shares. In the 52-week period, the stock has been trading in a range of $3,460-$5,059.00.
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