Thursday 21 November 2019

Warren Buffett's Berkshire in major $37.5bn deal

Billionaire Warren Buffett, owner of Berkshire Hathaway
Billionaire Warren Buffett, owner of Berkshire Hathaway

Katherine Chiglinsky

Warren Buffett's Berkshire Hathaway has agreed to buy Precision Castparts, a maker of equipment for the aerospace and energy industries, in a deal valued at $37.2bn, including debt.

Buffett's firm will pay $235 a share in cash, the companies said yesterday in a statement.

That's 21pc more than Friday's closing price for the Portland, Oregon-based company, which had dropped 17pc in 12 months amid the slump in energy prices.

The deal is one of the largest by Buffett, who has been building his Omaha, Nebraska-based firm in recent years with the acquisition of industrial companies such as Iscar Metalworking in 2006 and chemical maker Lubrizol in 2011. It will also help work down a cash pile that climbed to more than $66 billion at Berkshire as of the end of June.

"This is a business that's multi-decade in nature," David Rolfe, who manages about $11bn, including Berkshire shares, at Wedgewood Partners, said of Precision Castparts.

"They have these incredibly long relationships with some of their customers. And people aren't going to Fred's mouldings or Fred's castings to get a little bit cheaper part on the inside of a jet engine." (Bloomberg)

Irish Independent

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