Warren Buffett’s investment company Berkshire Hathaway Inc. struck a deal Monday to buy aerospace supplier Precision Castparts Corp. for $37.2 billion, marking the billionaire investor’s biggest deal to date. Following the announcement, shares of Precision Castparts surged 19 percent to $230.74 in premarket trading.
The 84-year-old, known as "The Oracle of Omaha," told CNBC on Monday he would have bought the company even without the energy slump that reduced its share price over the last year. Shares of Precision have lost 17 percent in the last 12 months due to the precipitous decline in oil prices.
"We're going to be in this business for the next 100 years, so it doesn't really make any difference what oil and gas does in the next year," Buffett told CNBC on Monday. "This is right up there at the top" of expensive deals, Buffett said. "This a very high multiple for us to pay."
Berkshire will borrow about $10 billion and use about $23 billion of its cash, Buffett said.
The deal, which is subject to regulatory approval, is expected to close in the first quarter of next year. If approved, the deal would top Berkshire Hathaway’s $26.5 billion takeover of Burlington Northern Santa Fe railroad in 2010.
Berkshire, which has a market value of $354 billion, oversees and manages some 80 subsidiary companies, in markets ranging from food, insurance, energy to railroad. The company owns investments in Coca-Cola Co., International Business Machines Corp., Wells Fargo & Co. and American Express Co.
The Oregon-based Precision Castparts, which has a market capitalization of $26.7 billion, makes equipment for the aerospace and energy industries, including Airbus and Boeing. The company also serves the power and general industrial markets, including multinational conglomerate General Electric Company.
Berkshire had previously owned 3 percent of the company, and was its largest shareholder. Berkshire offered to aquire Precision Castparts for $235 per share, a premium of 21.2 percent to Precision's Friday close of $193.88.
Berkshire and Brazilian investment firm 3G bought H.J. Heinz Company in 2013, which announced earlier this year it was buying Kraft Foods Group Inc. for $46 billion, creating world’s fifth-largest food and beverage company with annual revenue of $28 billion.