# Briggs & Stratten talking of taking over Murray for money owed



## bontai Joe

Press Release Source: Briggs & Stratton Corporation 


Briggs & Stratton Corporation to Evaluate Acquisition of Selected Assets of Bankrupt Murray, Inc.
Tuesday November 30, 8:04 am ET 


MILWAUKEE, Nov. 30 /PRNewswire-FirstCall/ -- Briggs & Stratton Corporation (NYSE: BGG - News)

Briggs & Stratton Corporation (the "Company") today announced that it is evaluating the acquisition of certain assets of Murray, Inc. ("Murray"), a major original equipment customer who filed for protection under Chapter 11 of the Bankruptcy Code on November 8, 2004.

On October 18, 2004, the Company announced that it was establishing a $10 million reserve on a trade receivable from Murray of approximately $40 million because of developments affecting Murray. The Company is now participating in discussions with Murray regarding the Company's interest in purchasing certain assets of Murray. In connection with this acquisition, the Company would seek to realize value from the assets acquired that would exceed the amount of the trade receivable and the price paid for the Murray assets. Completion of a transaction is subject to agreement on price, the negotiation of a purchase agreement, approval by the Company's Board and other customary conditions for a transaction of this type, as well as approval by the Bankruptcy Court. There can be no assurance that these conditions will be met or that a transaction will be completed.

If the Company succeeds in its bid for these assets, accounting rules would require it to separately assess the economics of the asset acquisition and its pre-existing customer relationship with Murray. Consequently, the consummation of a transaction would result in the impairment of substantially all of the remaining trade receivable from Murray. This would require the Company to recognize an additional loss of approximately $30 million in the second quarter of fiscal 2005. Even if the Company ultimately does not proceed with a transaction and another party acquires the assets of Murray, or Murray implements another plan approved by the Bankruptcy Court, it is likely that the trade receivable from Murray will be further impaired. Based on these developments, on November 29, 2004 the Company determined that the Murray receivable is further impaired. However, the extent of the impairment depends on the outcome of Murray's bankruptcy proceedings and therefore cannot be quantified at this time. We will continue to monitor the situation and make a determination as to the final amount of the impairment when more complete information is available.

This release contains certain forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those projected in the forward-looking statements. The words "approval", "conditions", "determine", "evaluate", "if", "negotiate", "outcome", "seek", "subject to", and similar expressions are intended to identify forward-looking statements. The forward-looking statements are based on the Company's current views and assumptions and involve risks and uncertainties that include, among other things, our ability to successfully negotiate a purchase agreement; obtain approval of the negotiated agreement from several different constituencies; obtain economically reasonable financing for the transaction; the actions of other suppliers and the customers of the equipment manufacturer; actions by other potential acquirers of the customer; the ability to successfully realize the maximum market value of acquired assets; the effects of weather on the purchasing patterns of consumers; the seasonal nature of the lawn and garden business; changes in laws and regulations, including environmental, pension funding and accounting standards; work stoppages or other consequences of any deterioration in Murray's employee relations; acts of war or terrorism that may disrupt our business operations or those of our customers and suppliers; changes in customer and OEM demand; changes in prices of raw materials and parts that we purchase; changes in domestic economic conditions, including housing starts and changes in consumer disposable income; changes in foreign economic conditions, including currency rate fluctuations; new facts that come to light in the future course of litigation proceedings which could affect our assessment of those matters; and other factors that may be disclosed from time to time in our SEC filings or otherwise. Some or all of the factors may be beyond our control. We caution you that any forward-looking statement reflects only our belief at the time the statement is made. We undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made. 




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Source: Briggs & Stratton Corporation


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## Michael

I kind of wonder on this one whether to let Murray go or to acquire the assets. The budget priced market should be one I would think should be fairly strong in the near future with the economy improving and if the price of gasoline remains high it might be the incentive to get the assets. But I kind of question whether Briggs and Stratton is biting off more then it can chew after acquiring Simpicity earlier this year. This is a toss up if it can be done. I would like to see Murray return as a American owned company again but I wonder how far in debt they are and what risk is it to B&S.


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## balmoralboy

Sounds like a good idea, right. You can't pay your bill, so I'll take your plant and business to settle the debt. Keeps the market for your product, and allows you to get something for your bill which wasn't going to be paid. Something like me taking the Nissan truck as compensation for the week of vacation I wasn't going to get.........

But under the accounting rules they have to write off the debt from Murray, which means they report a loss, since they didn't get cash for the sale of engines. Looks bad and the stock goes down, and incidentally the IRS doesn't get the corporate tax on $40 million of earnings. Then they report the acquisition of the assets as a balance sheet increase and nobody loses except the other taxpayers................ Looks like a great way to make your purchases of assets deductible for tax purposes! 

Sounds like a very good deal long-term for the shareholders, but it may not fly because of concern for short-term share prices. Hope they can figure out how to make Murray profitable and do this deal!


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## Neil_nassau

During this "merger-acquisition" mania thats been going on in our industry it would give Briggs and Stratton a presence in the mass merchant business that they DON'T have with the Simplicity group.

Think MTD having so many mass lines and cub Cadet dealer premium lines...........think John Deere selling the Home Depot stuff and their premium dealer line.....Toro sells a ton of walks to mass and owns the Landscape contractor business....Electrolux/AYP has Sears pvt label business as well as Poulan,Husqvarna ,Jonsereds & Weedeater names....a manufacturer simply has to have broad products to survive.

This would give Briggs mass merchant product (Murray), independent dealer consumer product (Snapper & Simplicity) and commercial product (Ferris).

And the companies listed above, Gentlemen, are the ones likely to survive this mess.


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## balmoralboy

Right on the money, Neil. But what happens now in the engine business?

Toro buys Kohler?

MTD builds their own? Or buys Toro to get Kohler?

Deere already builds their own, but expands to small engines?

How's your crystal ball on that front?


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## Neil_nassau

LOL.........My crystal ball cracked a long time ago ! 

But......

Kohler ,of course, is part of the plumbing fixture company (pvt owned) , and stands the most to gain.They simply look to take advantage of strained relations between Briggs and the remaining mower manufacturers. Their problem is capacity.
I look for Kohler to expand their smaller horsepower engines (already have the single cylinder Courage series for consumer riding products. Acquiring money losing Tecumseh engines might put KOhler (or anybody else for that matter,MTD?) in the business before Kawasaki and Honda get revved up to address that market. Don't forget new Kohler head came from Tecumseh conglomerate owned Fasco.

MTD (Briggs largest oem customer) already builds their own geartrain components by owning MTD gear division and part of Sunstrand/Hyrogear (the other major expense of a riding mower) and I think will be content to get good deals from Kohler,Honda and Kawasaki on engines.

Diito John Deere a major Kawasaki and Kohler customer,although they buy alot of their geartrains from Tanzaki.

There are over 6 million walk mowers sold a year..that is what makes Briggs so cash rich. Murray bill is just a hiccup to them.btw Briggs will expand their Chinese manufacturing capability....how cheap can a walkmower,pressure washer or generator get?..stand by.

Sleeper here is Honda......they consider themselves an engine manufacturer......their products are vehicles for their engines.....they've been quietly ramping up uS production of the series OHC consumer engine.....look for it more and more in consumer walk mowers.

Toro,Im not so sure about......they're roughly 2 billion $ including golf,irrigation,consumer and commercial biz.......(pvt owned MTD,by comparison, is roughly the same size pretty much all consumer)...and publicly held.

Im going to go out on a limb ..look for Toro to be the next target (not neccessarily successfully) of a major comglomerate that would maybe spin off consumer to another eager waiting player.

YIKES!.....My ball just smoked up............:hide:


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## MowHoward2210

> _Originally posted by Neil_nassau _
> *.........
> 
> YIKES!.....My ball just smoked up............:hide: *


I bet that baby's heated up and the smoke's coming off the outside!  

Thanks for the interesting insights, Neil.

Oh BTW, I saw some CC CUT's while driving in KC, but it was in rush hour traffic, had the wife & kids (we're on vacation), and it was snowing, so I couldn't take a look see.


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## balmoralboy

> _Originally posted by Neil_nassau _
> *LOL.........My crystal ball cracked a long time ago !
> 
> But......
> 
> Kohler ,of course, is part of the plumbing fixture company (pvt owned) , and stands the most to gain.They simply look to take advantage of strained relations between Briggs and the remaining mower manufacturers. Their problem is capacity.
> I look for Kohler to expand their smaller horsepower engines (already have the single cylinder Courage series for consumer riding products. Acquiring money losing Tecumseh engines might put KOhler (or anybody else for that matter,MTD?) in the business before Kawasaki and Honda get revved up to address that market. Don't forget new Kohler head came from Tecumseh conglomerate owned Fasco.
> 
> MTD (Briggs largest oem customer) already builds their own geartrain components by owning MTD gear division and part of Sunstrand/Hyrogear (the other major expense of a riding mower) and I think will be content to get good deals from Kohler,Honda and Kawasaki on engines.
> 
> Diito John Deere a major Kawasaki and Kohler customer,although they buy alot of their geartrains from Tanzaki.
> 
> There are over 6 million walk mowers sold a year..that is what makes Briggs so cash rich. Murray bill is just a hiccup to them.btw Briggs will expand their Chinese manufacturing capability....how cheap can a walkmower,pressure washer or generator get?..stand by.
> 
> Sleeper here is Honda......they consider themselves an engine manufacturer......their products are vehicles for their engines.....they've been quietly ramping up uS production of the series OHC consumer engine.....look for it more and more in consumer walk mowers.
> 
> Toro,Im not so sure about......they're roughly 2 billion $ including golf,irrigation,consumer and commercial biz.......(pvt owned MTD,by comparison, is roughly the same size pretty much all consumer)...and publicly held.
> 
> Im going to go out on a limb ..look for Toro to be the next target (not neccessarily successfully) of a major comglomerate that would maybe spin off consumer to another eager waiting player.
> 
> YIKES!.....My ball just smoked up............:hide: *



Thanks, Neil

The only thing I have to add is that Toro looks to be the most vulnerable, as a public company, while Kohler could possibly be spun off if the wrong guy gets in control of the plumbing business, or if too much capital is required for the next round of engines. 

MTD also has a major auto parts business which provides a large part of their profit. Unless the family decides to get out and sells to KKR or somebody like that, they are likely well enough funded to do what they want. And that would include buying Tecumseh or Kohler if they thought that was the good strategic move and it was available. In the meantime, it'll depend if Honda, Kohler, or Kawasaki gets price-competitive with Briggs.


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## Neil_nassau

KOhler is pvt owned and well financed....no reason to sell......Kohler and their Courage engine is only viable 18~20hp single cylinder Briggs competiton. Right about MTD......well financed,smart cookies......and no shareholders (all stock inside held ) to worry about...they get engines from Kohler cheaper than they could build them themselves.

Kawasaki is all twins (US built btw) now right down to 13hp....more expensive although we're getting recoil start 13hp twins very reasonable.

Honda's not even in the single game except for the 11 hp single they've had for years. Tecumseh is ....well, Tecumseh........lol. Not recognized as anything but a price point engine.....and if Briggs gets Murray.................well Stanleys will have Briggs instead of Tecumsehs.

Ill go further on the limb.......Electrolux has salivated for Toro for years...( be nice to get Toro/Exmark in one whack). Tor's been very profitable and would bring top dollar for shareholders.Hope Im wrong though.
Remember,executives make BIG $ takeovers of public companies then move on...Swedes also made a run at Ariens/Gravely (one of the other non-public companies left) a while back.....they got da bucks.

Gonna be interesting the next few years....ch.ch.ch.ch.changes.


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