Warren Buffett's Berkshire Hathaway is closing in on its biggest acquisition as it negotiates a deal worth about $30 billion to buy Precision Castparts, an aerospace equipment maker, people familiar with the matter said.
The conglomerate controlled by the Omaha billionaire could agree the terms of a deal as early as this week, said one person, who cautioned that the transaction could still fall apart.
Berkshire, which has a cash pile for potential deals worth about $67 billion, already controls a 3 per cent stake in the Portland, Oregon-based company, which has a market capitalisation of about $26.7 billion and employs about 30,000 people.
Precision, which also manufactures metal components for industrial gas turbines, has been hit over the past year by the fall in energy prices and weaker demand for oil and gas distribution. Its shares have fallen 19.5 per cent since the start of 2015 and closed at $193.88 on Friday.
Acquisitions that can make a difference to a company of Berkshire’s size are few and far between, and Mr Buffett has likened looking for them to “elephant hunting”.
In May, Berkshire celebrated 50 years under the control of Mr Buffett, who turned an ailing textile company into the largest conglomerate in the US, with a market capitalisation today of $354 billion.
The company’s operations span insurance and lending, railways, manufacturing and power companies, and it maintains a portfolio of minority stakes in other large US companies.
More recently, the company has struck up a partnership with the Brazilian private equity group 3G Capital, with which Berkshire has financed the merger of food giants Kraft and Heinz and the takeover of Canada's Tim Hortons coffee chain by Burger King. – Copyright The Financial Times Limited 2015
