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Omaha-based Berkshire Hathaway Inc. announced late Wednesday (July 20) that it plans to acquire privately held RV manufacturer Forest River Inc., Elkhart, Ind., from its founder and sole owner, Peter J. Liegl.
Terms of the cash sale were not released, according to Liegl, who says he will remain as president and CEO of the company after the buyout is completed. The Berkshire Hathaway release states that the company will retain the rest of Forest River’s current management team and will remain headquartered in Elkhart.
“We are very excited about the growth prospects of Forest River,” states Warren Buffett, chairman of Berkshire Hathway, a holding company owning subsidiaries engaged in diverse business activities, including property and casualty insurance. “Pete Liegl and his strong management team have built a remarkably successful company that is well positioned for further growth. Forest River’s focus on building quality leisure vehicles at fair prices represents a strong opportunity for the company’s dealers and customers throughout the U.S. and Canada.”
Liegl, who launched Forest River in January of 1996 as a small manufacturer of conventional towable RVs and camping trailers, has overseen several years of impressive growth for the company, which currently employs 5,500 people at 71 facilities nationwide. Projected 2005 revenues are $1.6 billion for the company, which currently manufactures commercial buses, pontoon and fishing boats, cargo trailers, mobile offices, manufactured housing, recreational park trailers and a full line of mainstream recreational vehicles.
“Partnering with Berkshire creates a great opportunity for the employees, dealers and suppliers of Forest River to dramatically grow and build our business,” Liegl is quoted as saying in the release. “With Berkshire’s strong reputation and financial backing, we now have the firepower to make investments and acquisitions at a rate that otherwise would not have been possible.”
When questioned late Wednesday by RV Business regarding his reasons for selling at this time, Liegl added that he’s “guaranteeing as much as is humanly possible the continued existence of Forest River. Specifically, Berkshire Hathaway buys companies and keeps companies. They have the horsepower to do it and, by the same token, it’s not a high wire act like it might have been if we had sold to an investment group. Forest River had no debt before this, and Forest River has no debt after this.”
Liegl, moreover, says he places a lot of trust in Buffett, with whom he had dealt extensively during the negotiations. “The companies Warren Buffett has bought continue doing what they’re doing,” said Liegl. “Warren Buffett is a class act. He’s a man of his word with tremendous credibility. Berkshire Hathaway is a premier business of the world, and so I guess being associated with them, you can’t ask for any better. And it gives some real legitimacy to our business (the RV industry) to have Berkshire Hathaway owning Forest River.”
Part of the delay in closing the deal, the release adds, is due to the fact that the sale is subject to customary conditions, including the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Act. Following the acquisition, which is expected to occur during the year’s third quarter, Forest River will be a wholly owned subsidiary of Berkshire Hathaway.