Buffett Invests in Harley-Davidson
Buffett invests in Harley-Davidson
The combined $600 million was offered as senior unsecured notes to fund Harley-Davidson Financial Services.
This offering represents an important next step in executing our stated strategy for funding the lending activities of HDFS, says Tom Bergmann, chief financial officer of Harley-Davidson Inc. and interim president of HDFS.
Taking advantage of rising interest rates as global credit crunch drives off his competitors, Buffett is arranging private deals with a number of U.S. brands such as, Mars Inc., General Electric Co. and Goldman Sachs Group Inc. Obviously Buffett sees long term potential despite the current economic downturn.
Harley gained $1.87, or 16 percent, to $13.73 at 4:02 p.m. in New York Stock Exchange composite trading after earlier reaching $14.55, the biggest gain since November 2008. The motorcycle maker has lost about two-thirds of its market value in the past year. Berkshire advanced $1,100, or 1.2 percent, to $90,500.
Harley-Davidson recently reported a fourth-quarter profit decrease of 58 percent due to weaker demand for its motorcycles. The net income of $77.8 million, or 34 cents a share, was the lowest quarterly profit in nine years. Harley-Davidson is working to cut 1,100 jobs and close three plants to save at least $60 million a year. About 70 percent of the firings will take place this year and the rest in 2010, the company said.
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