Monday, June 15, 2009

Berkshire Moves In (again)

Warren Buffett continues his methodical (and quiet) consumption of America's manufactured housing industry. Today, he used a subsidiary (Southern Energy) of a subsidiary (Clayton Homes) to buy Cavalier Homes. And he used another subsidiary (Business Wire) to announce the deal. The day will come when no dollar bill escapes the Berkshire Hathaway web!

Funny how the name "Berkshire Hathaway" does NOT appear anywhere in the press release. And the press release is not on the Berkshire website.

The Wizard of Omaha lives! "Pay no attention to that man behind the curtain."

ADDISON, Ala.--(BUSINESS WIRE)--Cavalier Homes, Inc. (NYSE Amex: CAV) today announced that its Board of Directors has entered into a definitive merger agreement for the Company to be acquired by Addison, Alabama-based Southern Energy Homes, Inc. Terms of the agreement call for the payment of $2.75 cash for each outstanding share of common stock. Southern Energy Homes, Inc., a wholly owned subsidiary of Clayton Homes, is the industry leader in producing top-quality, customizable homes.

"The agreed share price represents a 23% premium over Friday's closing stock price in an all-cash offer to acquire Cavalier Homes," stated Bobby Tesney, Cavalier Homes' Chief Executive Officer. "Given the current economic conditions and the tough operating environment of the manufactured housing industry, the proposed merger with Southern Energy Homes represents a tremendous opportunity to maximize shareholder value.

"Our Board of Directors unanimously approved the proposed merger with Southern Energy Homes and believes this transaction is in our shareholders' best interests," Tesney added.

Keith Holdbrooks, Chief Executive Officer of Southern Energy Homes, remarked, "We are excited about adding Cavalier's top-notch retailers and expanding their product offerings. Cavalier has a dedicated team known for building high-value homes with consistent quality."

The Company expects to complete the transaction in the third quarter of 2009, subject to final documentation and other customary conditions, as well as the approval of Cavalier Homes' stockholders. Upon completion of the transaction, Cavalier Homes, Inc. will become a wholly owned subsidiary of Southern Energy Homes.

Avondale Partners, LLC acted as exclusive financial advisor to Cavalier Homes, Inc. and rendered a fairness opinion to the Board of Directors of the Company.

Cavalier Homes, Inc. and its subsidiaries produce and sell manufactured housing. The Company markets its homes primarily through independent dealers, including exclusive dealers that carry only Cavalier products.

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