Warren Buffett’s Berkshire Hathaway investment group is to snap up US aircraft components manufacturer Precision Castparts in a $37.2bn (£24bn) deal.
In a statement Mr Buffett said he had long admired the company, which makes complex metal components for the aerospace, power and industrial sectors.
“For good reasons, [it] is the supplier of choice for the world’s aerospace industry, one of the largest sources of American exports” Mr Buffett said.
Berkshire Hathaway said it expected the deal, which is subject to approval by the Precision Castparts shareholders, to close during the first three months of next year.
Mark Donegan, Precision’s chief executive, said the deal offered “compelling and immediate value for our shareholders” and analysts said the deal was likely to go ahead.
If it goes through, the deal would be the biggest buy-out Berkshire has made.
Talking to reporters in the wake of the announcement Mr Buffett suggested he thought the company, whose share price is down 30 per cent over the past year, is under-priced by the equity markets.
“When you get a chance to buy a wonderful company, there is usually some reason why you are getting that chance and perhaps a slump in oil and gas helps us in this case” he said.
The oil price has halved in the past 12 months, reducing demand for components in some industries, not least oil and gas exploration.
The price being paid represents $235 a share, compared with Friday’s closing price of $194.
“Although the takeout price looks a little low to us, we doubt if [Precision’s] shareholders will say no to Warren Buffett, especially given the year-to-date performance in a tough equity market” said Robert Stallard from RBC Capital Markets.
Berkshire Hathaway is the world’s biggest conglomerate with a market capitalisation of $354bn. Its shares yesterday were trading at $214,909.94, flat on the day.
Mr Buffett, who has controlled the company for half a century, owns 37.39 per cent of it. Its other commercial interests include insurance, freight rail transportation and big stakes in popular food brands such as Heinz.
Mr Buffett’s biggest previous deal was 2009’s takeover of the Burlington Northern Railroad. Berkshire Hathaway paid $26bn for the 77 per cent of the company it did not already own.
