Berkshire Hathaway To Buy Precision Castparts In $37 Bln Deal

(RTTNews) - Billionaire Warren Buffett's Berkshire Hathaway, Inc. (BRK-A, BRK-B) agreed Monday to acquire Precision Castparts Corp. (PCP) for $235 per share in an all-cash deal valued at about $37.2 billion, including net outstanding debt. The deal is billed as Berkshire Hathaway's largest ever takeover.

The deal, unanimously approved by the board of Berkshire Hathaway, is expected to close during the first quarter of calendar year 2016, subject to approval by a majority of Precision's outstanding shares and competition clearance in certain foreign jurisdictions.

The offer price of $235 per share represents a 21.2 percent premium over Precision Castparts' closing price of $193.88 on Friday.

Omaha, Nebraska-based Berkshire is one of Precision Castparts' largest shareholders, with a 3 percent stake as of March 30. Founded in 1949, the Portland, Oregon-based company makes components such as fasteners and turbine blades for aircraft companies including Airbus Group SE (EADSY, EADSF)) and Boeing Co. (BA).

"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. Berkshire's Board of Directors is proud that PCC will be joining Berkshire," Berkshire's Chairman and CEO Warren Buffett said.

Following the closure of the deal, Precision Castparts will do business around the world under the same name and continue to operate out of its headquartered as a wholly-owned subsidiary of Berkshire Hathaway.

Berkshire Hathaway's proposed deal for Precision Castparts shows that Buffett is betting on a boom in aerospace manufacturing that will be driven by airline companies.

"We believe that as part of Berkshire Hathaway, PCC will be exceptionally well-positioned to support our customers' needs into the future. This transaction offers compelling and immediate value for our shareholders, and allows PCC's employees to continue to operate in the same manner that has generated many years of exceptional service and performance to our customers," Precision Castparts; Chairman and CEO Mark Donegan stated.

For the deal, Credit Suisse acted as financial advisor and Cravath, Swaine & Moore LLP and Stoel Rives LLP as legal counsel to Precision Castparts. Berkshire Hathaway's legal counsel is Munger, Tolles & Olson LLP.

PCP closed Friday's trading at $193.88, up $0.07 or 0.04 percent on a volume of 629,863 shares.

BRK.A closed Friday's trading at $215,462.77, down $187.23 or 0.09 percent.

BRK.B closed Friday's regular trading at $143.55, up $0.20 or 0.14 percent on a volume of 2.42 million shares. However, in after-hours, the stock declined $1.95 or 1.36 percent to $141.60.