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Banking industry

Berkshire Hathaway Subsidiary to Acquire Furniture Rental Company

Strategic Insights

— 2 min read

Berkshire Hathaway's Wesco Financial Corp. has agreed to purchase CORT Business Services Corp., a national provider of rental furniture, for $467 million, including $83 million in assumed debt. The acquisition reflects Berkshire Hathaway's expansion into the furniture rental market, further solidifying its position in the insurance and financial services industry. Charles Munger, chairman of Wesco and vice-chairman of Berkshire Hathaway, expressed confidence in the company's ability to strengthen CORT through its inclusion in the Berkshire group of companies.

Key Takeaways:

  • Wesco Financial Corp., a subsidiary of Berkshire Hathaway, has agreed to acquire CORT Business Services Corp. for $467 million, including $83 million in assumed debt.
  • The acquisition is expected to be completed in late February, with the merger finalized by late in the first quarter or early in the second quarter of the year.
  • CORT's board has unanimously approved the agreement, and Citicorp Venture Capital Ltd., which owns approximately 44% of the outstanding CORT shares, has agreed to tender all of its shares.
  • Wesco Holdings Midwest Inc., a subsidiary of Wesco, will offer to buy all outstanding shares of CORT common stock for $28 per share through a cash tender offer starting by January 24.
  • Charles Munger, chairman of Wesco and vice-chairman of Berkshire Hathaway, expressed confidence in the company's ability to strengthen CORT through its inclusion in the Berkshire group of companies.
  • Berkshire Hathaway's Wesco-Financial Insurance Co. had $2.4 million in net premiums written and $2.56 billion in policyholders surplus for the first nine months of 1999, according to A.M. Best Co. data.

Statistics:

  • $467 million: The total acquisition price, including $83 million in assumed debt for CORT Business Services Corp.
  • $28: The offer price for CORT common stock per share through the cash tender offer.
  • $83 million: The amount of assumed debt included in the acquisition price.
  • 44%: The percentage of CORT outstanding shares owned by Citicorp Venture Capital Ltd.
  • $6.34 billion: Berkshire Hathaway's net premiums written for the first nine months of 1999, according to A.M. Best Co. data.
  • $40.47 billion: Berkshire Hathaway's policyholders surplus for the first nine months of 1999, according to A.M. Best Co. data.
  • $2.56 billion: Wesco-Financial Insurance Co.'s policyholders surplus for the first nine months of 1999, according to A.M. Best Co. data.

Sources:

  • "Berkshire Hathaway Unit to Buy Furniture-Rental Company" (Jan 17, 2000)
  • A.M. Best Co. data on Berkshire Hathaway and Wesco-Financial Insurance Co. (1999)
  • COMTEX (http://www.comtexnews.com)

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