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Strategies & Market Trends : Speculating in Takeover Targets -- Ignore unavailable to you. Want to Upgrade?

To: richardred who wrote (973)	4/19/2006 12:56:47 AM
From: richardred	Read Replies (2) \| Respond to of 7243

Warren made his move. When will Nike! UPDATE 1-Russell stock jumps after Berkshire deal Tue Apr 18, 2006 2:23 PM ET (Adds details, updates stock prices) PHILADELPHIA, April 18 (Reuters) - Shares of Russell Corp. (RML.N: Quote, Profile, Research) rose 37 percent on Tuesday after an investment firm run by billionaire Warren Buffett agreed to buy the sporting goods maker for about $600 million. FACT BOX RML.N (Russell Corp) Last: $18.34 Shares of Russell, whose brands include Russell Athletic, Jerzees, Spalding, Brooks and Huffy, added $4.96 to $18.26 in afternoon trading on the New York Stock Exchange. Class A shares of Buffett's Berkshire Hathaway Inc. (BRKa.N: Quote, Profile, Research) eased 0.7 percent to $85,700, also on the NYSE. Although Russell's stock traded above the $18 per share cash offer from Berkshire, announced late Monday, some analysts doubted that another suitor would emerge since the sporting goods company is in the midst of restructuring. "We are somewhat surprised by the timing of the deal, given that (Russell) is coming off a turbulent six-month period in which its operations were disrupted by Hurricane Katrina, its Wal-Mart business was downsized, and the adverse commodity environment hurt earnings," said SunTrust Robinson Humphrey analyst William Chappell He said Russell would fit well with Berkshire's other investments, which include apparel company Fruit of the Loom, Fechheimer activewear and H.H. Brown Shoe. "We are uncertain if there will be other competing bids for this business but believe there is a limited number of companies that would want both (Russell's) activewear and sporting goods businesses," Chappell said. In February, Russell reported higher fourth-quarter earnings, but its shares fell on a disappointing sales forecast and fears the company's plans to send jobs to Mexico and Honduras weren't enough to improve profits significantly. It previously announced plans to cut about 2,300 jobs. Under terms of the deal with Berkshire, shareholders of Atlanta-based Russell will receive $18 per share in cash, a premium of about 35 percent to Russell's closing stock price of $13.30 on Monday. The deal values Russell at about 6.8 times cash flow, which is average for apparel companies, according to investment bankers. The merger agreement contains certain termination rights for both parties. Under certain circumstances, Russell would be required to pay Berkshire $22 million to cancel the deal, according to a filing with the Securities and Exchange Commission. Russell also agreed not to solicit new suitors or enter into talks for an alternative deal. If Russell gets an unsolicited offer that its board believes could be reasonably expected to result in a superior offer, Berkshire must be given two days to respond. © Reuters 2006. All Rights Reserved. yahoo.reuters.com