Buffett’s Bid for Media General’s Newspapers Harvard Case Solution & Analysis

On the 12th of May 2012, BH Media Group, a subsidiary of Warren Buffett’s Berkshire Hathaway, declared an offer to acquire Media General’s newspaper department for $142 million in cash and provide debt financing to the struggling business.

Feedback from investors and industry analysts varied considerably: one called it a "great surprise", another wondered if Buffett was investing with his heart rather than his head (he was a paperboy as a kid), and the third said it was a “feat of the financial engineering”. All of them contemplated what the “Oracle of Omaha” saw in decreasing U.S. paper industry that others did not. The question in front of Media General's CEO Marshall Morton was whether to accept the offer or not. As the head of an extremely leveraged company whose revenues had dropped 31% in the past four years, whose stock price was down more than 90% off its high, and whose falling productivity left it perilously close to breaking crucial debt covenants, he needed to move quickly.

PUBLICATION DATE: June 21, 2013 PRODUCT #: 213142-PDF-ENG

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