Berkshire Hathaway confirmed that it would buy the giant aerospace components company, Precision Castparts, for $32.3 billion, $235 a share, but not including the Portland, Oregon- based company's almost $5 billion in debt.
The deal is believed to be a big move for the Berkshire Hathaway as Precision Castparts serves as the top parts supplier to aviation and defense companies around the world. Precision Castparts normally have an annual sales of $10 billion which will make it the largest subsidiary of Berkshire.
The acquisition of Precision Castparts prevents Berkshire to take over the railroad BNSF in 2009 and trumps its other deals with Lubrizol and Heinz. Earlier this year, Buffet lend a hand to Heinz takeover of Kraft Foods that gave birth to Kraft Heinz Company.
Warren Buffet said in a press release regarding the deal with Precision Castparts that "I've admired PCC's operation for a long time. For good reasons, it is the supplier of choice for the world's aerospace industry, one of the largest sources of American exports. Berkshire's Board of Directors is proud that PCC will be joining Berkshire."
Mark Donegan, CEO of Precision Castparts said in return that "This transaction offers compelling and immediate value for our shareholders, and allows PCC's employees to continue to operate in the same manner that has generated many years of exceptional service and performance to our customers."
Despite of the acquisition, Precision Castparts will continue to use their name and will maintain its office in Portland. The company's financial advisor was Credit Suisse while its legal counsel are Cravath, Swaine & Moore and Stoel Rivesv. On the other hand, Munger, Tolles & Olson was Berkshire's legal counsel.
Precision Castparts' shares went up with almost 20% in pre- market trading which made it $231 a share while Berkshire experienced a 37% drop in their second quarter profits due to decreasing insurance earnings and low investment gains.
