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

To: Paul Senior who wrote (3144)	11/4/2012 9:39:33 AM
From: richardred	Respond to of 7239

Buffett into toys. The wife used to order stuff for kids through the OT catalog all the time. The catalog still comes to the house. Only makes sense over time, at the right price. Berkshire would want to add to expand catalog items. Buffett's Berkshire Hathaway Agrees to Buy Oriental Trading By MATT WIRZ Berkshire Hathaway Inc. BRKB -0.86% agreed to buy Oriental Trading Co., a mail-order toy and novelty vendor located in Berkshire's hometown of Omaha, Neb., adding another retail company to its stable, according to a person involved in the deal. The company agreed to pay about $500 million for Oriental Trading, said the person. The sale will mark a payday for Oriental Trading's shareholders, KKR KKR -1.04% & Co. being the largest, which bought the company out of bankruptcy 18 months ago. While Berkshire Chief Executive Officer Warren Buffett has recently talked about making large purchases, he continues to target small firms that generate cash, Berkshire's bread and butter. Berkshire didn't respond to requests for comment. In the last 12 months, Oriental Trading made about $70 million in earnings before interest, taxes, depreciation and amortization, or Ebitda, by selling party supplies, crafts, decorations and toys through the Internet as well as print catalogs. Private-equity firm KKR owns a one-third stake that it purchased through its KKR Asset Management business. KKR was a creditor to Oriental Trading and exchanged the debt for stock in the company when it exited from bankruptcy in February 2011, the person said. Other shareholders in the company include hedge funds Crescent Capital Group and Par IV Capital Management LLC. Oriental Trading has had a string of private-equity owners. Brentwood Associates owned the company until 2006, when it sold a 75% stake to Carlyle Group LP CG +0.73% for approximately $750 million in a deal valuing the retailer at about $1 billion, or 10 times Ebitda. Oriental Trading's sales began to slip shortly thereafter and, by early 2009, it had missed financial-performance targets required under its loan agreements, according to Moody's Investors Service. Funds including KKR, which had looked at Oriental Trading in 2006, began buying up the company's loans at a discount and eventually exchanged them for stock through the bankruptcy. Since then, Oriental Trading has increased revenue by improving its sales process and reaching new customers, boosting Ebitda by 20%, the person said. The company's shareholders began exploring a sale earlier this year, hiring Lazard Ltd. LAZ -0.46% to run the process. After an auction failed to yield a buyer, Berkshire stepped in with a compelling offer, another person close to the deal said. Berkshire's purchase values the company at about seven times earnings, allowing KKR to double its initial investment in Oriental Trading's loans, the people said. Berkshire owns a number of businesses in its home city, including the Omaha World-Herald newspaper it purchased a year ago and Borsheims Fine Jewelry. online.wsj.com