Southern Energy Homes Inc., a unit of Warren Buffett's Berkshire Hathaway Inc., said Monday that it has agreed to buy a rival, Cavalier Homes Inc., for about $51 million, or $2.75 a share, to increase sales of manufactured housing.
The price is a 23% premium over the June 12 closing price for Cavalier's stock. The company had 18.5 million shares outstanding as of April 23.
"We are excited about adding Cavalier's top-notch retailers and expanding their product offerings," Southern Energy's chief executive officer, Keith Holdbrooks, said in a press release.
Southern Energy is a unit of Berkshire Hathaway's Clayton Homes Inc., the largest maker of manufactured housing. Clayton had a market share about 34% last year, and Buffett predicted in February that it would increase its share of prefabricated home sales, because rivals are in "acute distress."
The industry sold 81,899 units last year, versus a peak of 372,843 in 1998, Buffett wrote in his annual letter to shareholders.
Cavalier said in April that its first-quarter sales revenue fell 60% from a year earlier, to $19.3 million, on "challenging market conditions."
In March the Addison, Ala., company sold a subsidiary that made loans to clients, saying the risks in that business had increased.
Clayton's first-quarter pretax earnings declined 63%, to $42 million, on revenue of $727 million.
The deal is expected to close in the third quarter, Cavalier said.