Oliver Barnes

I think what we're seeing here is a prelude to probably Berkshire's deal-making machine firing up again.

Well, it's both kind of a surprising move and not.

Berkshire has a ton of exposure to the home building and real estate sector.

They sold out of a lot of businesses, but built their position in Lena, which is a rival to Taylor Morrison.

They also own a paint company, an insulation company.

They own a big real estate brokerage.

So this is a sector that they clearly liked.

And it's kind of classic Berkshire to do a deal in an industry that's pretty cyclical.

And at the moment, the home building sector in the US is in a bit of a tricky spot.

There's a glut of inventory, which the home builders are struggling to get rid of.

And at the same time, like actual new builds of single family homes has slowed.

Well, is it risky?

I mean, it's quite a low premium deal.

It values the company's equity at $6.8 billion, puts the enterprise value, including debt, at $8.5 billion.

What do they want to do?

Berkshire owns another home builder called Clayton Homes, which tends to play in the kind of lower end of the market.

And effectively, they want to combine those two companies.

While home building is not growing at the moment, there are suggestions and projections that it could grow.

and that then they could benefit from that upside.

Of course, there are risks, right?