The 2020 Mid-Year Economic Update_long

Warren Buffett Bolsters Industrial Portfolio

Berkshire Hathaway's purchase of Precision Castparts largest in company history.
Eric-Smith-84x84

Warren Buffett's company, Berkshire Hathaway, boosted its portfolio with the $32 billion acquisition of manufacturer Precision Castparts Corp., but it also boosted the profile of the sometimes-anonymous industrial market.

The deal was sealed after Buffett spent only a half-hour with Precision Castparts CEO Mark Donegan before deciding that Donegan's "aerospace company was worthy of Berkshire Hathaway Inc.’s largest acquisition ever," according to an article in The Wall Street Journal.

"I've admired PCC's operation for a long time," Buffett said. "For good reasons, it is the supplier of choice for the world's aerospace industry, one of the largest sources of American exports."

Not everyone was impressed with the deal, however. Antony Currie of Reuters said that "Warren Buffet’s latest mega-deal lacks precision," and that the company "is a large, well-entrenched manufacturer in industries with a high barrier to entry. The company’s shares also have tumbled 40 percent from their peak in June last year. That smacks of just the sort of opportunity Buffett relishes."

Portland, OR-based Precision Castparts in May reported fiscal 2015 sales of $10 billion, up 5 percent year-over-year. And while Buffett's decision to pull the trigger on this deal speaks to his confidence in the company, it also underscores his confidence in the strength of the aerospace industry as well as the stability of the overall industrial market.

And it marks another distribution/manufacturing asset for Berkshire Hathaway. The company owns electronics components distributor TTI Inc. – No. 4 on MDM's 2015 Market Leaders list for electronics distributors – as well as IMC International Metalworking Cos., Marmon Holdings Inc. and McLane Co. Berkshire Hathaway also owns a key transportation asset in BSNF Railway Co.

About the Author
Leave a Reply

Leave a Comment

Sign Up for the MDM Update Newsletter

The MDM update newsletter is your best source for news and trends in the wholesale distribution industry.

By subscribing, you are agreeing to MDM’s Privacy Policy.

2

articles left

Want more Premium content from MDM?

Subscribe today and get:

  • New issues twice each month
  • Unlimited access to mdm.com, including 10+ years of archived data
  • Current trends analysis, market data and economic updates
  • Discounts on select store products and events

0

articles left

This is your last free article

Subscribe to MDM Premium today and get:

  • Unlimited access to MDM.com
  • 1 year digital subscription, with new issues twice a month
  • Trends analysis, market data and quarterly economic updates
  • Deals on select store products and events

1

article
left

You have one free article remaining

Subscribe to MDM Premium to get unlimited access. Your subscription includes:

  • Two new issues a month
  • Access to 10+ years of archived data on mdm.com
  • Quarterly economic updates, trends analysis and market data
  • Store and event discounts

To continue reading, you must be an MDM Premium subscriber.