Date
22 May 2017
Warren Buffett could be paying upwards of US$30 billion for Precision Castparts Corp. based on its closing valuation of US$26.7 billion on Friday. Photo: AP
Warren Buffett could be paying upwards of US$30 billion for Precision Castparts Corp. based on its closing valuation of US$26.7 billion on Friday. Photo: AP

Warren Buffett closes in on his biggest deal ever

Warren Buffett is nearing a deal to buy Precision Castparts Corp. in what could be his largest takeover ever.

Buffett’s Berkshire Hathaway Inc. is buying Precision which had a market value of US$26.7 billion as of Friday’s close.

That means the price tag could exceed US$30 billion, according to the Wall Street Journal which cites people familiar with the deal.

At that size, the deal would rank as Berkshire’s largest ever, the latest mega merger in a robust year for deal making.

A deal could be announced as soon as next week.

Berkshire is one of Precision Castparts’ largest shareholders with a 3 percent stake as of March 30.

Founded in 1949, the Portland, Oregon company makes components such as fasteners and turbine blades for aircraft companies including Airbus Group S.E. and Boeing Co. 

It also makes equipment for power stations and the oil-and-gas industry.

The company generates about half its annual sales of US$10 billion from big aircraft and engine makers.

Berkshire’s planned deal continues a wave of consolidation in the aerospace industry as aircraft makers boost output after securing orders for thousands of new jets, pushing suppliers such as Precision Castparts to cut costs and invest in new equipment to allow higher production rates.

Precision Castparts has grown rapidly through a series of acquisitions but its stock price has been weighed 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.

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