LESSON 7

Clear the Deal Path

IN 2003, thanks to a tip from some MBA students, Warren acquired the manufactured housing company Clayton Homes for $1.7 billion (or $12.50 per share). The numbers were great. Clayton operated 32 manufacturing plants in 12 states, and its homes were marketed in 48 states through a network of 1,540 retailers, 391 of which were company-owned sales centers.

But the deal was not as smooth as aluminum siding, and Warren had to work hard to clear the deal path. According to Fast Company, in 2004, the deal quickly led to shareholder litigation that alleged “self-dealing, abusive control and lack of candor.” Despite the fact that the manufactured home industry was in one of the worst slumps in decades and Warren’s acquisition ...

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