Buffett to buy Precision Castparts for $37.2B

As it has grown, the sprawling industrial empire Berkshire Hathaway, with holdings in railroads, insurance, retail and manufacturing, has increasingly looked to strike enormous takeovers in order to lift profit and revenue.

Buffett said: “I’ve admired PCC’s operation for a long time”. The acquisition of the aerospace company would be one of Buffett’s largest deals ever.

Berkshire Hathaway is already one of the largest shareholders in Portland-based Precision Castparts, having built up a three per cent stake in the company since 2012.

Before the deal Berkshire had a cash pile of about $67 billion.

Berkshire Hathaway is known for being involved in large transactions, among them the combination of Kraft and Heinz.

The proposed acquisition, which remains subject to approval by Precision Castparts’ stockholders, also is the latest multibillion-dollar deal in a series of giant mergers involving U.S. companies this year.

Precision Castparts will keep its name and continue to be based in Portland, Oregon.

Precision Castparts Corp.is a worldwide manufacturer of complex metal components and products with $10 billion annual sales which include powder production and isothermally forged PM superalloys and PM specialty steels.

Berkshire agreed to pay $235 per share in cash for Precision Castparts’ outstanding stock. His Berkshire Hathaway firm (Omaha, NE, US) is buying Precision Castparts Corp.

Schoonmaker said that means Precision Castparts’ business is relatively protected from competitors because the cost of switching away would be expensive for its customers.

George Morgan, a finance professor at the University of Nebraska at Omaha and a former investment adviser, said Buffett’s field of possible investments is limited because of the size he is looking for.

The pan-European FTSEurofirst 300 index progressed 0.7 percent, but Britain’s FTSE 100 – which has a greater exposure towards commodity stocks than other European markets – fared less well, rising by only 0.3 percent.

While the falling price of oil has hurt Precision Castparts, the aircraft industry that accounts for most of its top line is being helped by optimal tailwinds.

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