Berkshire Hathaway will acquire Precision Castparts (PCP) for $235 per share in cash, or a 21% premium over Friday’s closing price of $193.88. The transaction is valued at $37.2 billion including PCP debt. Berkshire will be using about $23 billion of its cash along with borrowing $10 billion to purchase PCP’s outstanding shares. This deal is expected to close during the first quarter of 2016. As of March 31, 2015, Berkshire owned about 3% of PCP’s shares. This initial investment in PCP was made by Todd Combs, one of Warren Buffett’s two portfolio managers.
Precision Castparts supplies parts such as fasteners and turbine blades to aircraft makers, and it makes pipes and other equipment for power stations and the oil-and-gas industry. In 2014, approximately 75 percent of Precision’s sales were to the aerospace industry, the rest coming from the energy and power sectors.
