Berkshire Hathaway is set to gain another foot in the aerospace business with its planned $37.2 billion acquisition of Precision Castparts Corp. (PCC). Berkshire announced today it had reached a definitive agreement to acquire PCC for $235 per share in cash and assumption of its outstanding net debt. The transaction, expected to close early next year, must still be approved by PCC shareholders and receive the necessary regulatory approvals.
“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 chairman and CEO Warren Buffett said. PCC chairman and CEO Mark Donegan added the acquisition would result in a “unique alignment between Warren’s management and investment philosophy and how we manage PCC for the long-term.” Donegan noted the transaction would provide immediate value for shareholders and enable the company’s employees “to continue to operate in the same manner.”
The acquisition would give Berkshire another major business in the aviation and aerospace markets, alongside NetJets and FlightSafety International. PCC brought in slightly more than $10 billion in revenues in its most recent fiscal year, with aerospace accounting for 70 percent of that business. Its customer base ranges from airframers such as Boeing, Bombardier, Gulfstream, Bell Helicopter, AgustaWestland, Sikorsky and Airbus, to suppliers such as Goodrich, Triumph, GKN and Rockwell Collins, to numerous other aerospace manufacturers. PCC produces structural investment castings and forged components, machined airframe components, and highly engineered, critical fasteners, among other products.