Valuation Of Precision Castparts Corp. (PCP)

Valuation Of Precision Castparts Corp. (PCP) by Dr. David Kass, University of Maryland

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On August 10, 2015, Berkshire Hathaway and Precision Castparts issued a joint press release announcing  that the boards of directors of Berkshire Hathaway and Precision Castparts have unanimously approved a definitive agreement for Berkshire Hathaway to acquire, for $235 per share in cash, all outstanding PCP shares. The transaction is valued at approximately $37.2 billion, including outstanding PCP net debt.

In a notice (dated October 13, 2015) of a special meeting to Precision Castparts shareholders to be held on November 19, 2015 to vote on this proposal, PCP’s financial advisor, Credit Suisse, provides a valuation of the company by performing (1) a comparable multiples analysis, (2)...