Warren Buffett’s Berkshire Hathaway (NYSE:BRK.A) has agreed to acquire Precision Castparts (NYSE:PCP), the maker of equipment for the aerospace and energy industries, in a deal valued at US$37.2bn, including debt.
Berkshiresaid it will pay $235 per share in cash, which is premium of 21% to Fiday's (August 7) closing price for the Portland, Oregon-based company.
Shares of Precision surged as much as 20% in early trading today. They had lost 17% over the past year amid the slump in energy prices. The cost of a barrel of oil has more than halved in that time.
The takeover, Berkshire’s largest ever, extends Buffett's push into the industrial sector and exceeds Berkshire's US$26.5bn takeover of Burlington Northern Santa Fe railroad in 2010.
“I’ve admired PCC’s operation for a long time,” Buffett was quoted in the statement as saying. “It is the supplier of choice for the world’s aerospace industry, one of the largest sources of American exports.”
Berkshire was already one of Precision Castparts' largest shareholders, with a stake of about 3% as of March 31. Precision Castparts will become a unit of Berkshire, keeping its name and Portland headquarters.
Berkshire Hathaway is known for getting involved in large deals, among them the combination of Kraft and Heinz. It owns various businesses, including insurance and railroad companies, utility, clothing, furniture, brick, carpet, jewelry and pilot training firms.
The deal is expected to close in the first quarter of next year.
Credit Suisse was financial adviser to Precision Castparts.