Warren Buffett Just Made One of His Biggest Deals Ever

WASHINGTON, DC - SEPTEMBER 19: Warren Buffett, chairman of the board and CEO of Berkshire Hathaway, speaks in Gaston Hall at Georgetown University, September 19, 2013 in Washington, DC. Bank of America CEO Brian Moynihan moderated the discussion with Buffett. Buffett also took questions from Georgetown students. (Photo by Drew Angerer/Getty Images)

It’s a $37.2 billion cash transaction

Warren Buffett’s Berkshire Hathaway announced Monday that it has agreed to acquire Precision Castparts, a Portland, Ore.-based maker of aircraft components, for around $37.2 billion in cash. The $235 per share deal represents a 21.2% premium over Friday’s closing price for Precision Castparts stock.

It is the largest acquisition ever by Berkshire Hathaway BRK.A -0.09% , either alone or with a partner. Its prior record was the $36 billion billion purchase of Kraft Foods by Heinz, which is backed by both Berkshire and private equity firm 3G Capital.

Reports of the deal first leaked over the weekend, as is typical in a major Buffett transaction. Here was some of what Fortune‘s Steve Gandel wrote Sunday:

Precision’s highly specialized parts for airplane makers gives the company a “business moat,” a protection from competitors, that Buffett has said he looks for. The company gets 70% of its $10 billion in revenue from the aerospace industry, as airlines have ramped up demand for fuel-efficient jets. The acquisition is also a bet on the improving finances of the newly consolidated airline industry and the economy in general, which Buffett has long been positive on. For Precision, which has recently done a number of small acquisitions and plans to continue, the Berkshire acquisition will give it access to Buffett’s large checkbook.

Buffett told CNBC this morning that he first made the “high multiple” bid during last month’s Allen & Co. conference in Sun Valley, and that the recent “slump in oil and gas” may have helped his cause.

You may also like...