By Marilyn Odendahl, Truth Staff
ELKHART -- When Pete Liegl, founder and chief executive officer of Forest River, met billionaire and investment guru Warren Buffett, the Elkhart business leader knew the day had arrived for his company to be sold.
Liegl and Buffett announced Wednesday that Forest River is being acquired by Buffett's holding company, Berkshire Hathaway. Negotiations for the acquisition began earlier this month and the final agreement is subject to approval by federal regulators.
"I think this is an excellent day for everybody," Liegl said Thursday. "This is the biggest guarantee I could have that (Forest River) will carry on."
This is not Berkshire Hathaway's first acquisition of a local company. In 2002, Buffett's company acquired CTB International Corp., a manufacturer of equipment for grain storage and poultry, hogs and egg farming in Milford.
The current acquisition is not expected to bring any work-force reductions at Forest River. Liegl will continue to manage the business as president and CEO and the company will remain headquartered in Elkhart, according to Wednesday's joint announcement.
The acquisition also will have no effect on an ongoing lawsuit brought by Patriot Homes against Forest River's manufactured housing division. Liegl dismissed the legal action as a "nuisance suit" but Steven Like, executive vice president and general counsel for Patriot Home, said his company plans to "aggressively pursue it."
Local economic experts called the Forest River acquisition a "vote of confidence" for one of Elkhart County's fastest-growing companies.
"To have somebody like Warren Buffett look at your company I think is very complimentary to your leadership," said Bill Bradley, executive director of the Economic Development Corp. of Elkhart County. "It has the potential to be very positive for the community because Berkshire Hathaway has the financial capacity to really grow a company."
Liegl sees the acquisition as a way for Forest River to continue to expand, particularly in the commercial bus market and possibly in the boat and RV industries as well.
Clayton Homes, maker of manufactured homes in Maryville, Tenn., credits its ability to expand to becoming a wholly owned subsidiary of Berkshire Hathaway. Within a year of being acquired, Clayton was able to buy its competitor, Oakwood Homes.
Chris Nicely, vice president of marketing at Clayton, said that without the "capital strength" of Berkshire Hathaway, his company would have had to purchase the company in pieces rather than buying the entire package at once.
The acquisition of Forest River by Berkshire Hathaway could be good news for the entire RV industry. When Berkshire Hathaway acquired Clayton Homes in 2003, the stock prices of manufactured home makers rose throughout the industry, Nicely said.
Indeed, Buffett's entrance into the RV industry could be seen as a sign that the RV market is maturing and will not be subject to the ups and downs of the economy.
Speaking Thursday, Buffett said he wanted to acquire Forest River for "the chance to partner up with Pete Liegl."
Liegl's larger-than-life persona certainly matches Buffett's. Fired from his job in the RV industry, Liegl founded Forest River in 1996. Within nine years, the company has grown to 5,500 employees and 71 facilities throughout the United States. Last year, the company generated $1.3 billion in revenues and is projected to reach $1.6 billion in revenues for 2005.
The company is undergoing a major expansion, adding seven buildings to its Goshen campus.
The acquisition negotiations began about two weeks ago when Liegl and Buffett met on a boating and golfing trip. The two industry captains quickly "reached an agreement on a handshake."
Liegl said a major objective of the deal was to ensure that the employees "will be taken care of."
Berkshire has a reputation of buying companies and continuing to run them, often with the local management team remaining in place.
Nicely agreed, saying daily operations did not change when Berkshire Hathaway acquired Clayton. The acquisition enabled Clayton to expand its market share which Nicely said created more job security.
At Clayton, the work force grew from 8,000 at the time of the Berkshire acquisition to 13,000 today.
"For us, it has meant opportunity and continued growth and strength for our team members," Nicely said.
Bradley said local leaders must continue to entice Forest River to build in Elkhart County by attracting good workers and providing quality-of-life amenities as well as giving economic support in the form of tax breaks and infrastructure construction.
"We have to be vigilant as a community and make sure we're as competitive as we can be," Bradley said.
Truth reporter Thomas Bona and the Associated Press contributed to this story.
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