Berkshire to Buy Wal-Mart's Grocery Distributor

Wal-Mart will sell the unit's trucking division to Swift Transportation.
By TSC Staff ,

Warren Buffett's

Berkshire Hathaway

(BRKA)

will buy

Wal-Mart's

(WMT) - Get Report

grocery distribution unit for a little less than $1.5 billion.

The purchase of McLane Co. comes as one of the industry's biggest players,

Ahold NV's

(AHO)

US Foodservice, is enmeshed in an accounting scandal. Buffett, whose reputation for above-board business dealing is as high as anyone's, said in a release announcing the deal that "there is an excellent possibility for expansion of the customer base in the future."

McLane, based in Temple, Texas, contributed about $15 billion of sales to Wal-Mart last year. It is a wholesale distributor of groceries and other items to convenience stores, drug stores, wholesale clubs, mass merchandisers, restaurants, theaters and other outlets. It was acquired by Wal-Mart in 1990.

As is his habit, Buffett will leave the acquired company's existing management in place.

Wal-Mart also agreed to sell its Merit Distribution trucking unit to

Swift Transportation

(SWFT)

, a Phoenix-based national truckload carrier. Excluding a one-time gain, the transaction will have a dilutive effect on Wal-Mart's earnings of about 1 cent a share in fiscal 2004 and about 2 cents in fiscal 2005.

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