Warren Buffett’s Berkshire Hathaway Announced It Would Acquire Precision Castparts Corp. (PCC) for US$37.2bn

Date: 2015-08-19

PCC is a leading aerospace parts supplier around the world. The company was founded in Portland, Oregon, USA in 1949. It has established a full value chain in its 66 years of history through acquiring the upstream material supplier and aerospace forging leader Wyman-Gordon and the aerospace fastener bellwether SPS. In the past decade, its revenue and earnings grew at a CAGR of 13% and 20% respectively and its free cash flow kept growing. In 2015, its aerospace, electricity and industrials business lines contributed 70%, 17% and 13% of revenue, respectively.

PCC has cutting-edge technologies in an oligopoly market. It focuses on producing complex high-strength metal parts that are heat resistant and corrosion preventive. Its three flagship products – investment castings, forged components and fasteners – all have built extremely high entry barriers in terms of manufacturing technology,processing strength and machining accuracy. It is a monopolistic producer of aircraft engine blades with the world’s top three aircraft engine manufacturers GE, Rolls-Royce and United Technologies Corporation all being its clients.

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