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Berkshire Hathaway to purchase Precision Castparts for $32 billion

This is Warren Buffett's biggest purchase to date.

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In this 2014 file photo, Berkshire Hathaway Chairman and CEO Warren Buffett gestures during an interview with Liz Claman on the Fox Business Network in Omaha, Neb.

Nati Harnik/AP/File

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Warren Buffett is making the biggest bet of his long investment career, a $32.36 billion buyout of Precision Castparts in a deal that will continue to reshape his Berkshire Hathaway conglomerate.

The acquisition of the aerospace and industrial company would top Buffett's $26.7 billion deal for BNSF railroad in 2010. It also follows several huge deals outside of the core insurance companies Buffett built his investment empire on that included manufacturing, railroads, utilities and food companies.

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Buffett said Monday that Berkshire will pay $235 per share in cash for Precision Castparts' outstanding stock. The deal is valued at about $37.2 billion, including debt.

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Precision Castparts, based in Portland, Oregon, has been hit hard by tumbling crude and natural gas prices, but Buffet told CNBC that he would have bought the company even if he knew that commodities were in the midst of a multiyear slump.

"We're going to be in this business for 100 years, so it doesn't really make any difference what oil and gas does in the next year," Buffett said.

Author and investor Jeff Matthews, who wrote "Warren Buffett's Successor: Who It Is and Why It Matters," said he doesn't think Berkshire is getting a good price on Precision Castparts, so he's not sure it will be good for shareholders, especially since Precision's business is tied to the airline industry.

"I'm not crazy about buying a cyclical business like this with the stock market at an all-time high," said Matthews, who also holds Berkshire stock.

But other analysts said the price appeared fair.

KBW analyst Meyer Shields said Precision Castparts Corp. may be a cyclical business, but Berkshire already owns a number of those and doesn't mind uneven profits in the short term. Shields said Precision Castparts stock had traded as high as $280 in recent years.

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"From the Berkshire perspective, they're getting a good company on sale," Shields said.

Precision Castparts will keep its name and will remain in Portland.

The boards of Precision Castparts and Berkshire Hathaway Inc. unanimously approved the transaction, which is expected to close in the first quarter of next year.

Shares of Precision Castparts surged 19 percent, or $37, to $230.88 in early trading.