Clayton Homes buys manufactured housing rival
(Editor's Note: The following article contains new information gathered since publication yesterday. Note the new material in the research and direction sections.)
Berkshire Hathaway subsidiary Clayton Homes Inc. will purchase a rival in the manufactured housing business, according to The Birmingham News
Clayton Homes will buy the Addison, Ala.-based Southern Energy Homes for about $110 million. The company manufactures about 7,000 homes each year and reported revenue of $202 million last year.
Southern Energy Homes plans to retain its brand identity, according to James Stariha, Southern Energy's chief financial officer. He said management and operations will also remain in place.
The deal is expected to close in mid-October and must pass regulatory approval.
The acquisition will bring Maryville, Tenn.-based Clayton Homes’ manufacturing production up to 38,000 houses annually. The company generates more than $700 million in revenue annually.
Clayton sells its housing through 448 company-owned stores and more than 1,400 independent retailers. The company has also built 71 manufactured housing communities and subdivisions and dabbles in the mortgage and insurance market as well.
Berkshire Hathaway, the investment conglomerate controlled by Warren Buffet, owns Clayton Homes. Berkshire also owns Geico Insurance, a company famed for its innovative marketing campaign featuring a talking lizard.
We spoke to Chris Nicely, Clayton Homes’ Vice President of Marketing, about the acquisition.
He confirmed that the Southern Energy brand won’t be changing.
“This product fills a niche that we aren’t able to address, so (Southern Energy) fills that void very nicely.”
Nicely said the target demographic for Clayton Homes and Southern Energy Homes is working families with household incomes between $25,000 and $50,000 per year.
He said that the company doesn’t have any dedicated nationwide advertising plans, although the company does have a “significant Web presence.”
“We rely on local stores and individual dealers to merchandise our product to consumers,” he said.
Nicely said the company handles creative work in-house, but is interested in hearing from agencies.
“We are always looking for good talent outside the organization to help exercise our plans,” he said.
According to The List
database, Knoxville, Tenn.-based The Bingham Group handles marketing and branding duties for Clayton Homes. The company spent $10.7 million on advertising in 2004, according to Nielsen Media Research.
Nicely made it clear that Clayton will keep the Southern Energy brand, but he also indicated a willingness to hear from agencies. We think Clayton Homes makes a nice under-the-radar prospect. As we stated earlier, Clayton is having more trouble selling the houses that it builds now that interest rates have risen from historic lows. Agencies should approach the company with suggestions on better reaching their target audience.
Clayton Homes / Vanderbilt Mortgage
5000 Clayton Road
Maryville, TN 37804
Vice President of Marketing
Southern Energy Homes
144 Corporate Way
P.O. Box 390
Addison, AL 35540
Chief Financial Officer
Executive Vice President, General Counsel