Buffett Says Marmon Deal A Bet on American Business

Warren Buffett said Berkshire Hathaway's decisionto pay $4.5 billion for a majority stake in an industrial conglomerate owned by Chicago's Pritzker family is a "very large bet on America over a long period of time."

Warren Buffett
Warren Buffett

"Marmon is our kind of company," said Buffett, Berkshire's CEO, in an interview on CNBC's "Squawk Box." "It's in some very basic businesses, but good businesses. It has terrific management. It is a chance to do a very big transaction."

Berkshire will buy a 60 percent of stake in Marmon Holdings,which has about $7 billion in annual revenue. Berkshire will purchase the rest of the company in stages by 2014, with the final price determined by Marmon's future performance.

The deal marks Berkshire's largest-ever acquisition outside of the insurance industry.

Privately held Marmon is an international association of more than 125 businesses in sectors including wire and cable, transportation services and industrial products.

Prior to closing, Marmon will distribute a "substantial" amount of cash and certain assets to selling shareholders, Berkshire said in a statement.

Marmon is owned by trusts for the benefit of members of the Pritzker family, which is best known for starting the Hyatt hotel chain. Jay and Robert Pritzker bought Marmon in 1953, and Jay's son Tom became chairman in 2002.

The deal is subject to closing conditions, including regulatory approvals.