Financial Management: Analysis of BRK's Acquisition of Precision Castparts Corporation

Running Head: FINANCIAL MANAGEMENT 1
FINANCIAL MANAGEMENT

Running Head: FINANCIAL MANAGEMENT
Table of Contents
Question 1..................................................................................................................... 3
Question 2..................................................................................................................... 4
Comparable companies concern........................................................................................... 4
Question 3..................................................................................................................... 4
Question 4..................................................................................................................... 4
Question 5..................................................................................................................... 5
References................................................................................................................. 7

Running Head: FINANCIAL MANAGEMENT
Question 1
The interpretation of the investor towards the announcement that BRK would purchase
precision Castparts Corporation for a total cost of $37.2 billion has been determined below. From
the overall analysis it can be stated that Precision are gaining by 19.11% to $231 in the pre-
market which have been trading. According to the index the share price of the Berkshire
Company, the share price of the company has toggled and the acquisition of PCP Berkshire
Hathaway’s largest deal ever. According to the reviews the trends lines of Berkshire Hathaway
reached to double the level of the returns. The relationship between the trend lines is kind of the
inverse relationship and this defines that the market forces are not having major impact on the
share price of the company. The average returns determined by the S&P 500 index is less than
the returns scored by Berkshire Hathaway. He investors thought this deal would destroy value of
BRK. However, the price paid for PCP exceeded the present value of its future cash flows
(Stempel, 2015).
09/30/76
02/28/79
07/31/81
12/31/83
05/31/86
10/31/88
03/31/91
08/31/93
01/31/96
06/30/98
11/30/00
04/30/03
09/30/05
02/29/08
07/31/10
12/31/12
05/31/15
$1
$100
$10,000
$10,00,000
Berkshire Hathaway Class A Shares versus
S&P 500 Index over 39 Years
(INDEX) Berkshire Hathaway Inc. Class A - Price
(INDEX) S&P 500 - Price