At $235 per share, Buffett will pay a premium of 21% over PCC’s closing price on Friday.
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At .2 billion, the Precision Castparts deal is a standout transaction in what has been a banner year for mergers, with more than $2.7 trillion in acquisitions already announced.
“We see a unique alignment between Warren’s management and investment philosophy, and how we manage PCC for the long term”, Mark Donegan, the Precision Castparts chairman and chief executive, said in a news release.
Up to Friday’s close, Precision Castparts’ shares had fallen about 15 percent in the past 12 months, underperforming an 8 percent rise in the S&P 500 index.
We are investigating the Board of Directors of Precision Castparts for possible breaches of fiduciary duty and other violations of state law in connection with the sale of Precision Castparts to Berkshire.
Precision Castparts has grown rapidly through a series of acquisitions but according to the WSJ, its stock price has been weighed down by a series of production problems, destocking by one of its largest customers and the exposure of its pipeline business to the oil-and-gas sector. The $37 billion price tag includes assumption of Precision Castparts’ debt. Precision Castparts manufactures complex metal components and products for the aerospace industry, including aircraft makers Boeing and Airbus, and also products for chemical processing and the oil and gas industry.
With a company the size of Berkshire Hathaway, Buffett needs to strike big deals to meaningfully improve profits.
Though it was founded here, with a headquarters in the Johns Landing area and local plants in Milwaukie and elsewhere, it’s a global company, with more than 29,000 employees and 157 manufacturing sites. As of June 30, the company had $66.6 billion in cash on hand.
I think hes setting things up for the future and he doesnt want anything terribly risky, said Andy Kilpatrick, the investor who wrote Of Permanent Value: The Story of Warren Buffett.. One of his two investment managers, Todd Combs, bought shares in the company back in 2012, and Buffett… Energy and raw-materials shares climbed more than 2.5 percent.
If they do, Berkshire said its purchase could be compete by early next year.
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This week, investors can still enjoy a cheaper price than Warren Buffett’s Berkshire Hathaway (NYSE:BRK.A)(NYSE:BRK.A) paid for three other companies in its portfolio: IBM Corp.
