It’s been almost a two-decade long mistake for billionaire investor Warren Buffett, but he finally gets to wash his hands clean of USG Corp., a company he considered a “disappointing” investment, as reported by Bloomberg. And he still managed to walk away with a win.
Buffett’s Berkshire Hathaway acquired a 31 percent stake of Chicago-based USG, a manufacturer of construction materials, 18 years ago. In recent years, USG has been plagued by issues stretching from asbestos claims to financial issues. During those problematic times, Berkshire Hathaway came to the company’s aid, like in 2008 with a $300 million bankruptcy bailout.
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Now, USG has agreed to a $7 billion buyout by its second-largest shareholder, Germany’s Knauf, effectively buying out Berkshire in the process. The move, which was announced on Monday, makes a quick buck for shareholders, who will receive $44 per share. That amount is a 36 percent premium over the average closing price for the last 12 months. As for Berkshire’s stake, it’s valued at $1.9 billion.
The acquisition is an all-around win for the three parties. Knauf now has access to the North American construction market. USG shareholders are now a lot richer and company headquarters will remain in Chicago. And Berkshire finally gets to walk away.
The deal is expected to close in early 2019.
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