Another "major" player in the L&G industry is first in line to pick up the pieces left behind by Murray, including European and Wal-Mart business. Murray workers will be told by Christmas what is going on at their plant, with the transaction complete by the end of February, 2005. The rumor mill has B&S as one of the possible suitors, with another company in China also in the running.
I heard this news over the holiday weekend. This was pretty much decided last week. Briggs is a shoe-in to get Murray. This completes their "Dealer Line" strategy. Talk about having an asset handed to you. Here we go again in the U.S. - taking assets that were overvalued when purchased by Asians (remember Japan in California and Hawaii and the real estate in the 1980's? Same thing - we got it all back for less than half the price). China is bailing. This is just the tip of the iceburg in China. They're reeling in inflation right now. That house of cards is about to come down, and we will have another Asian crisis on our hands. I can't say WHEN it will happen, just that it WILL.
Disclaimer: As always, IMHO. Position disclosure: Flat
From the action of the stock price on the announcement it seems that the market is viewing the potential buyout of Murray as a plus to BGG. Would lock up a buyer for its low end engines and should increase the profit hamgins on those sales. Guess we will have to wait until the deal, if there is one, is finalized to see its terms and potential benefit to BGG.
I work in the industry. My sources are good. The first part of my post is pretty much set in stone. It appears WMT has given the boot to Murray. I can't disclose the company picking up the business, but let's just say they already have ties with WMT. The second half of my post does note "rumor mill". But the people talking are knowledgeable in the industry, so I respect what they're saying. B&S may be interested to move more engines and to round out the bottom end of their "Dealer Line" holdings. Snapper, Simplicity and Ferris are higher $ items when compared to Murray. Murray brings the entry point tractor to "Dealer Line". One needs to look at the bigger picture here. I feel B&S is trying to get out from under the retailer squeeze by starting its own stores. It redefines the supply chain, and I see others besides B&S considering this strategy. WMT carries TOO much power now, and the suppliers are sick of having to cut their price 5% every single year. It's not worth it.
I'm with you on what appears to be your down view on Murray, but it does make sense to consider buying them if you're B&S.
Disclaimer: As always, IMHO. Position disclosure: Flat (BGG, WMT)