Berkshire Hathaway to Buy Precision Castparts for $37.2B

August 10, 2015

Berkshire Hathaway, Omaha, Neb., announced a deal to acquire Precision Castparts Corp., Portland, Ore., for $37.2 billion, which would be the biggest deal ever for Warren Buffett’s firm.

"This takes us out of the market for an elephant for 12 months or so ... but we will be buying a few small things in the next six months," Buffett told CNBC.

Berkshire offered of $235 per share, a 21.2% a premium for the aerospace casting giant’s Friday closing price of $193.88. The company's shares were trading at $230.85 before the market opened on Monday, Aug. 10.

With a stake of roughly 3%, Berkshire was already one of Precision Castparts' largest shareholders, according to regulatory filings from earlier this year. Precision Castparts gets about 70% of its sales from the aerospace industry, which has seen demand for commercial aircraft increase in recent months.

"When you get a chance to buy a wonderful company, there is usually some reason why you are getting that chance and perhaps a slump in oil and gas helps us in this case," Buffett said.

Buffett expects Berkshire to use about $23 billion of its own cash and borrow the rest to finance the deal.

"We will have about $40 billion in cash once we get through this," Buffett said. "I like to have a lot of cash at all times."

MCDP Magazine