Buffett’s Berkshire to Acquire Justin Industries

Warren Buffett, cowpoke?

Berkshire Hathaway Inc. (BRK/B), the holding company of billionaire investor Buffett, agreed Tuesday to buy Justin Industries Inc. (JSTN), a leading U.S. brick maker and the manufacturer of Nocona boots, for $600 million in cash.

Berkshire agreed to pay $22 a share for Justin, a 23% premium to its closing stock price Monday.

“It’s got a clean balance sheet, rising earnings and positive cash flow--all things value investors look for,” Bear Stearns analyst Gar Schneider said of Justin.

However, the company’s footwear business, which represents about 30% of its revenue, hasn’t been profitable for several years, Justin Chairman John V. Roach told Bloomberg News last fall.

The company also makes Justin and Tony Lama boots, as well as Chippewa shoes.

Buffett, chairman of Berkshire Hathaway, said the company can expect autonomy.

“It is an absolutely first-class business run by first-class people,” he said. “The managers who have produced Justin’s outstanding results will continue to run operations from Fort Worth just as they have in the past.”

Justin shares rose $4 to $21.88 on Nasdaq, a 52-week high but still below their all-time peak in the early 1990s. Berkshire rose $5 to $1,853 on the NYSE.

(Bloomberg News)

Ticker Talk: Shares of Santa Barbara-based Inamed Corp. (IMDC) fell 10% on Tuesday after a Food and Drug Administration expert panel recommended the agency reject the medical-device maker’s weight-loss product. Inamed slipped $4.56 to $40.44 on Nasdaq, but the stock still is up 173% in the last 12 months. Panel members said they wanted to see how patients fared in losing weight over a longer period than the two years covered by the company’s studies of the product, called Lap-Band, an implantable device designed to treat extreme obesity by cinching off part of the stomach. The decision should delay--not derail--the company’s effort to bring the product to the U.S. market, analysts said. . . . Broadcom Corp. (BRCM) shares jumped 13% after Standard & Poor’s said the No. 1 maker of chips for cable modems and digital TV set-top boxes will be added to the S&P; 500 index. The Irvine-based company’s stock climbed $19.30 to $166.80 on Nasdaq. Broadcom will replace GTE Corp. (GTE), which is being bought by Bell Atlantic Corp. (BEL), in the benchmark index at a date to be announced.