Wal-Mart sells distribution arm in $1.5bn deal
McLane sold to company chaired by Warren Buffett
May 3 2003
Wal-Mart has sold its grocery distribution business McLane to Berkshire Hathaway Inc, a company chaired by billionaire entrepreneur Warren Buffett – who began his career working in the family grocery business.
McLane, based in Texas, has ben owned by Wal-Mart since 1990 and is one of the largest US wholesale distributors of groceries and nonfood items to convenience stores including the 7-Eleven chain, drug stores and similar retailers, as well as wholesale clubs, fast food restaurants, and cinemas. Last year. its trade sales were $14.9bn, with a further $7.2bn in sales to Wal-Mart. It also provides retail logistics and IT services.
Lee Scott, Wal-Mart’s president and chief executive officer said the $1.5bn deal “is positive for both Wal-Mart and McLane. The sale will allow Wal-Mart to focus completely on its core retail business, and it will create expanded business opportunities for McLane.
“McLane is a profitable, well-managed company with thousands of outstanding teammates, and we appreciate the significant contribution they have made to our business for the past 13 years.”
McLane president and chief executive officer Grady Rosier said: “McLane Company and our dedicated teammates have thoroughly enjoyed the years spent with Wal-Mart Stores, Inc. We are equally excited about joining Berkshire Hathaway Inc. and the opportunities this change in ownership will create for our future. We see this event as very positive for our customers, supply partners and McLane teammates.”
Buffett, chairman of Berkshire, said: “Grady Rosier has developed a service oriented organisation that supplies tens of thousands of locations in an extraordinarily efficient manner. We believe there is an excellent possibility for expansion of the customer base in the future.”
Buffett, whose share tips are followed by thousands of US small investors, has famously said that ths last ‘real’ job was earning 25 cents an hour in his family’s Omaha grocery store. He has existing business links with Wal-Mart.
