MILFORD, INDIANA, U.S. — CTB International Corp. has signed a definitive merger agreement with Berkshire Hathaway Inc. Upon completion of the transaction, CTB will become a wholly owned subsidiary of Berkshire Hathaway.
The company said the total value of the transaction, including approximately US$40 million of assumed debt, was approximately US$180 million.
The merger agreement is subject to approval of a majority of CTB’s shareholders and to regulatory approvals. The transaction is expected to close in the fourth quarter of this year. Victor A. Mancinelli, CTB’s president and chief executive officer, hailed the agreement as a significant step forward for the company.
"The deal enables us to find an outstanding permanent home for this business," he said. "It’s good for our customers, our loyal employees and managers, as well as providing an assured return on our shareholders’ investments.
"As a small-capitalization, public company with limited research coverage, we were not widely followed by public market investors. Berkshire Hathaway will provide us with improved access to capital to support our longer term growth strategy."
Warren Buffett, chief executive officer of Berkshire Hathaway, also expressed enthusiasm for the transaction.
"This is a strong company with great American values," he said. "It has an excellent franchise, strong market share in a basic industry and top-flight management," he said.
American Securities Capital Partners (ASCP), the Chocola family — who are descendents of CTB’s founder Howard Brembeck, and certain members of management have entered into a shareholders agreement with Berkshire Hathaway pursuant to which they have agreed to vote shares under their control representing more than 55% of outstanding shares in favor of the transaction.
ASCP, a New York-based private-equity investment firm, acquired a controlling interest in CTB principally from the Brembeck family in January 1996 and assisted the company in completing an initial public offering in August 1997. ASCP currently controls 4.6 million shares, or 42% of the shares outstanding.
Michael Fisch, president of ASCP, said that CTB had achieved more than 68% growth in sales since 1995, growing to more than $230 million in 2001. Its net earnings have risen nearly 120% during that same time from approximately $6.5 million in 1995 to over $14 million last year, while substantially all of the debt incurred to acquire CTB has been repaid.
CTB has more than 1,300 employees and has facilities throughout the United States, Europe and Latin America and a worldwide distribution network.
Berkshire Hathaway is a holding company owning subsidiaries engaged in a number of diverse business activities.