Rodent Regatta

Warren Buffett doesn’t ”play” the stock market. He buys businesses. There’s a huge difference. He doesn’t want to own a part of a business that he wouldn’t want to own in its entirety.

He offered to buy Clayton Homes back in April (WARNING: direct link to pdf file). After the months have past, the decision was to come to a vote among the Clayton shareholders yesterday. Here’s what Warren Buffett made absolutely clear to them prior to the vote (WARNING: direct link to pdf file).

Yesterday, the shareholders and directors delayed once more. They wanted two more weeks to see if they get a better offer. It’s not likely. The Berkshire offer of $12.50 a share rests near the middle of Clayton’s recent trading range. The business has had some setbacks since the offer was made.

Dithering and thumbsucking and wringing of hands is not likely to help. As a result they owe Warren Buffett $5 million by close of business today in consideration of one of the stipulations in the original purchase agreement.

$5 million represents better than 4% of the profit in the company for the past 12 months. With 136.2 million shares outstanding and an annual dividend of $0.06 per share, $5 million would cover the dividends for better than 60% of the shares. A well-run business appears to be slipping a bit at the point of turning loose!