As announced in its press release, Warren Buffett’s investment company Berkshire Hathaway signed a deal to buy Precision Castparts Corp., a leading manufacturer of equipment for the aerospace and energy industries, for $37.2 billion including debt. PCC is a supplier to such companies as General Electric Co., Boeing Co., and Airbus Group SE. Berkshire agreed to pay Precision Castparts $235 per share in cash as well as take on about $5 billion of the company’s debts.
On August 7, the premium to Precision Castparts’ outstanding shares came up to 21 percent to the stock’s closing price. Amidst the ongoing decline in oil prices, the company’s stocks dropped by 17 percent over the past year. At the end of the previous trading session, the Oregon-based manufacturer had a market capitalization of $26.7 billion.
However, during Monday’s pre-trading session the stocks of Precision Castparts soared by 19 percent while Berkshire’s shares slid by 1.8 percent.
Deal completion is expected in the first quarter of 2016 and is likely to raise the investment company’s annual revenue by $10 billion followed by a potential staff expansion by almost 10 percent.
Berkshire Hathaway has been PCC’s shareholder since 2012 while its share was estimated at less than $1 billion.
“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,” Buffett says.
