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Warren Buffett Announces $37 Billion All-Cash Deal To Acquire Precision Castparts

Warren Buffett unveiled his conglomerate’s largest takeover ever on Mionday as Berkshire Hathaway Inc. (NYSE:BRK.A) (NYSE:BRK.B) announced plans to acquire Precision Castparts, in an all-cash deal valued approximately $37.2 billion, including debt.

Unveiling the pricey deal, Warren Buffett told CNBC’s “Squawk Box” that “This is a very high multiple for us to pay”.

Warren Buffett's Berkshire Hathaway to acquire Precision Castparts at $235 per share in cash

In a statement released Monday, the board of directors of Berkshire Hathaway Inc. and Precision Castparts Corp announced their unanimous approval for a definite agreement for Berkshire Hathaway to acquire, for $235 per share in cash, all outstanding PCC shares. The transaction is valued at approximately $37.2 billion, including outstanding PCC net debt.

The deal has an equity value of about $32 billion based on Precision Castparts’ shares outstanding as of June 28. The conglomerate’s offer of $235 per share represents a premium of 21.2% to Precision Castparts’ Friday close of $193.88.

Mirroring the latest announcement, the industrial company’s shares were trading at $231.56 before the bell on Monday.

Precision Castparts’ deal at $37.2 billion marks a standout transaction in what has been a banner year for mergers, with over $2.7 trillion in acquisitions already announced. Berkshire’s latest deal comes amidst the conglomerate sitting on a pile of cash to invest, which soared to nearly $67 billion as of June 30.

Berkshire’s biggest deal to date was his takeover of the 77% of Burlington Northern Santa Fe railroad it didn’t already own in 2010 for $26 billion.

For over two years, Berkshire has been building a position in Precision Castparts, which is one of the giant conglomerate’s smaller positions. Its 3% stake in the industrial company was valued at $814 million as of March 30.

Established in 1949, Precision Castparts makes components such as fasteners and...