Oriental Trading CEO Says Berkshire Hathaway Deal Is Right Fit

Nov 05, 2012 9:00 PM  By

Berkshire Hathaway, the Omaha, NE-based holding company owned by billionaire Warren Buffett, announced Friday it had acquired Omaha, NE-based gifts and novelties merchant Oriental Trading Co. in an all cash deal for an undisclosed sum. The deal is expected to close by the end of November.

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Oriental Trading president and CEO Sam Taylor said in an email that he and the entire management team will continue to run the business.

“By increasing revenue, profits and the customer base over the last few years, Taylor and the entire Oriental Trading team have successfully improved the business and positioned it for long-term growth,” Buffett said in a press release.

Taylor said in an email Friday that the combination of his company’s strong performance in the past two years coupled with the current debt market conditions allowed Oriental Trading’s board of directors to consider strategic alternatives including refinancing, recapitalization, or a sale of the company.

“My CFO and I conferred and decided that if Oriental Trading were to be sold, there would be no better outcome than having Berkshire Hathaway acquire the business,” Taylor said.

The sale helps Oriental Trading Co. by giving it a “permanent home with an owner who truly invests for the long term,” Taylor said.

“Warren told me that he is buying Oriental Trading and plans to hold it forever,” Taylor said. “This deal gets our company off the private equity treadmill of putting the company up for sale every few years, which is a big distraction for the management team and employees.”

Brentwood Associates owned the company until 2006 when it sold a 75% stake to The Carlyle Group. When OTC exited Chapter 11 bankruptcy in February 2011, about 15 financial institutions comprised OTC’s new ownership with none retaining a majority stake.

Oriental Trading filed for Chapter 11 in 2010 under the name OTC Holdings and on behalf of Oriental Trading, OTC Investors Corp., Fun Express and Oriental Trading Marketing. The 80-year-old merchant, which throughout the restructuring maintained double-digit operating margins, had reduced its debt by nearly 70% while in Chapter 11, Taylor told Multichannel Merchant last year.

Lazard Middle Market acted as financial advisers to Oriental Trading Company.