Warren Buffett’s Berkshire Hathaway agreed to buy Precision Castparts in the legendary investor’s most ambitious deal ever — although he had barely heard of the company until three years ago.

Share story

When a lieutenant to Warren E. Buffett first invested in Precision Castparts three years ago, the billionaire had hardly heard of the metal-parts manufacturer.

Now Buffett has bought the company in his biggest takeover ever.

Berkshire Hathaway, his $354 billion business empire, said Monday that it would buy Precision Castparts for $32 billion. The move will help move Buffett’s company — which includes earlier acquisitions ranging from the Burlington Northern Santa Fe railroad to Fruit of the Loom underwear — further into the industrial sector. Including debt, the transaction is worth $37.2 billion.

Not only is the acquisition Buffett’s most ambitious — just weeks from his 85th birthday — but it is also a standout in what has been a banner year for mergers, with more than $2.7 trillion in deals already announced.

Deal watchers and fans of Berkshire Hathaway have long expected the conglomerate to strike huge deals with regularity. The company generates an enormous amount of cash from its various operations, sitting on nearly $67 billion as of June 30.

And Buffett has long spoken about his “elephant gun,” the huge pile of cash that Berkshire Hathaway has reserved for big deals, and his itchy trigger finger.

Precision Castparts would fit in well with the conglomerate’s other industrial acquisitions in the last decade, including the chemical maker Lubrizol and the industrial manufacturer Marmon.

“I’ve admired PCC’s operation for a long time,” Buffett said in a statement Monday. “For good reasons, it is the supplier of choice for the world’s aerospace industry, one of the largest sources of American exports.”

Under the terms of the deal, Berkshire will pay $235 a share for Precision Castparts, representing a 21 percent premium to its closing price Friday.

Even by Buffett’s admission, that is a high price to pay. The billionaire told CNBC that he was largely unaware of Precision Castparts until Todd Combs, one of his two investment managers, first began investing in the metal- parts company in 2012.

Yet after talking with Mark Donegan, the industrial manufacturer’s chairman and chief executive, in a meeting at Berkshire’s headquarters in Omaha five weeks ago, he became impressed and began thinking about buying the company.

He formally made the offer to Donegan last month at the annual Allen & Co. conference in Sun Valley, Idaho — birthplace to many a deal, from Comcast’s purchase of NBC Universal to the sale of The Washington Post to Amazon.com’s Jeff Bezos.

“I made a bid, he took it to the board and before long, we had a deal,” Buffett told CNBC.

The transaction for Precision Castparts, news of which emerged over the weekend, is subject to shareholder and regulatory approval, and is expected to close in the first quarter of 2016. The company will continue to do business under the Precision Castparts name and maintain its headquarters in Portland, Ore.

In a message to employees, the company said there are no plans to reduce the number of employees because of the acquisition. “PCC’s goal is to grow our company through new and existing customers and investments in our business.”

Precision Castparts manufactures a variety of metal parts used in products like aircraft engines and gas turbines. The company reported $1.5 billion in profit for the year that ended March 29, on $10 billion in sales. It began operating under the Precision Castparts name in 1953, and it employs more than 30,000 people at 155 plants worldwide.

Its operations include a half-dozen Puget Sound facilities, some resulting from recent acquisitions. Precision Castparts in 2013 purchased a 300-employee Kent firm, Protective Coatings. In 2011, it bought Primus International, which has advanced machining and assembly facilities in Auburn, Bothell and Woodinville that supply hard metal machined parts and assemblies as well as actuation and control systems for the aerospace industry.

In the CNBC interview, Buffett said Berkshire was unlikely to make another major acquisition for the next year or so, saying that the Precision Castparts deal “takes us out of the market for an elephant.”

Still, Buffett said, “We’ll probably be buying a few small things in the next six months.”