Berkshire Hathaway Inc. (NYSE:BRK.A) (NYSE:BRK.B) will buy two non-core units from IMI Plc, an industrials group, for $1.1 billion in cash. The conglomerate led by Warren Buffett will close its latest acquisition, although it is comparatively a small one, in a continued acquisition streak this year.
Post deal, the IMI units will come under the Marmon Group, which is a subsidiary of Berkshire Hathaway that posted revenue of $7 billion last year, according to a statement from IMI Plc.
Post deal, IMI to focus more on other businesses
The IMI beverage and merchandising division makes soda dispensers, which are used in restaurants. This year, Berkshire helped take H.J. Heinz private and acquired the Western utility NV Energy.
IMI will sell both of its units to Berkshire Hathaway Inc. (NYSE:BRK.A) (NYSE:BRK.B) and that will conclude the process IMI started in London this year after it revealed plans to sell the units and enhance its flow control business.
IMI will utilize the money to return £620 million ($994 million) to shareholders and contribute £70 million to the company’s British pension fund. Advisors of IMI on the sale and return-of-capital program were J.P. Morgan Cazenove and Citigroup while the sale of the merchandising division was advised by Robert W. Baird & Company.
“[This is] a positive development that will enable IMI Plc to focus on the better-margin and higher-growth fluid controls business,” said J.P. Morgan Cazenove analyst Glen Liddy.
IMI Chief Martin Lamb told reporters that the company’s acquisition pipeline is “reasonably well stoked in terms of opportunities,” focused on bolt-on deals valued at between £50 million and £150 million.
Berkshire Hathaway on acquisition spree
Back in June, Buffet’s Marmon’s EXSIF Worldwide unit bought German industrial tank specialist Lindenau Fahrzeugbau GmbH. HomeServices of America, a residential estate brokerage and a subsidiary of Berkshire Hathaway Inc. (NYSE:BRK.A) (NYSE:BRK.B)’s MidAmerican Energy Holdings, announced that it will acquire the smaller U.S. brokerage Prudential Fox & Roach for an undisclosed sum.
Marmon is a group of three primarily independently managed companies, together holding about 150 manufacturing and services businesses. The three Marmon companies are: Marmon Engineered Industrial & Metal Components Inc.; Marmon Natural Resource & Transportation Services Inc. and Marmon Retail & End User Technologies Inc.
This latest transaction indicates the current trend of acquisitions that is going on in the U.K. However, some sellers are saving their offerings with hopes of further improvements in trading conditions before concluding any deal, Nick Sealy, managing director at Baird told The Wall Street Journal. Nick added that there are a huge amount of unfulfilled Merger and Acquisitions, and multiples are very good as of now.
