Aerospace component makers including Rockwell Collins and Triumph Group surged after Warren Buffett’s Berkshire Hathaway Inc. agreed to buy Precision Castparts Corp. for $37.2 billion.
Precision Castparts, a Portland, Oregon-based manufacturer that gets more than two-thirds of revenue from aerospace, rose the most in 15 years as Buffett placed a bet on the industry with one of his largest deals. The $235-a-share acquisition “could support aero stocks near term, highlighting confidence in the cycle and causing investors to consider other potential M&A targets,” Seth Seifman, an analyst with JPMorgan Chase & Co., said in an Aug. 10 note.
The deal pushes Berkshire further into heavy industry and cuts reliance on insurance and stock picking, growth engines for most of Buffett’s 50 years in charge. The Omaha, Nebraska-based firm bought industrial companies such as Iscar Metalworking in 2006 and chemical maker Lubrizol in 2011.
Precision rose 19 percent to $230.92 at the close in New York, the biggest gain since March 2000. The move helped send the S&P 500 Industrials Index up 1.9 percent and erased most of Precision Castparts’ 20 percent decline this year through Friday.
Rockwell Collins Inc. advanced 2.7 percent to $87.93, its biggest jump since September. Esterline Technologies Corp. rose 2.6 percent, the most since March. Triumph Group Inc. gained 2.4 percent while Spirit AeroSystems Holdings Inc. rose 2.9 percent.