Berkshire Buys Xtra for $590 Million
by Adam Peeler - Smallcapcenter.com News
August 1, 2001
Xtra Corp. (NYSE:XTR) has been touched by the golden hand of Warren Buffett.
The billionaire’s company Berkshire Hathaway Inc. (NYSE: BRK.a) announced Tuesday it agreed to buy the transportation equipment lessor for about $590 million in cash.
Investors in Westport, Ct-based Xtra drove the stock up 4.6% to $54.72 on volume of 1.3 million. The stock hit a new 52-week high today. Its low is $38.75 set the same day last year.
Terms of the deal will see Berkshire Hathaway pay $55 a share for Xtra – only a 5% premium based on Monday's closing price. Xtra leases truck trailers, marine containers and piggyback trailers to railroad companies, trucking firms and shipping businesses.
"Xtra is an outstanding business with a wonderful reputation. It will be a great addition to the Berkshire Hathaway group of businesses," stated Buffett, Berkshire Hathaway’s chairman.
Tuesday’s transaction, which is expected to close in the fall, bolsters Buffett's expansive holdings in the transportation equipment leasing space. The deal is also Berkshire Hathaway’s tenth acquisition in the past year-and-a-half.
Buffett, the nation’s best known investor gained notoriety in the bull run of the 90’s by avoiding technology stocks and concentrating on traditional businesses like Gillette (NYSE: G) and Coca-Cola Co. (NYSE: KO).
In Xtra, Buffett is buying a company that’s having troubles keeping up with the pace it set last year.
Later Tuesday, Xtra reported third-quarter earnings of 55 cents a share or $6 million. The same period last year the company made $1.15 a share or $14 million.
Xtra officials said the lower results were a result of an economic slowdown in the U.S.
``We are disappointed that the economic slowdown is lengthening," stated Lewis Rubin, chief executive of Xtra. "We had hoped for a better seasonal recovery in our fiscal third quarter than has occurred. It is clear that the company's fourth quarter and full-year financial performance will continue to lag behind last year's results.''
Smallcapcenter.com’s advanced research department gave Xtra a signal stockscore of 98 Tuesday after the market close.
A company’s stockscore is an unbiased summary of numerous technical analysis indicators like volume and momentum, which are combined to produce a value on a scale of 1-100 with 100 being the highest level. |
