Precision Castparts Corporation, owned by Mr. Buffett, has reached a deal to acquire Wilhelm Schulz, the world leader in piping components. It’s the second acquisition by Mr. Buffett in Germany in the past two years. U.S. billionaire Warren Buffett has purchased another mid-sized German company through a subsidiary of his holding company Berkshire Hathaway, Handelsblatt has learned. Precision Castparts Corporation, or PCC, purchased by Mr. Buffett two years ago for $37 billion (€34 billion), has reached a deal to acquire Wilhelm Schulz, the world leader in piping components. Wilhelm Schulz has 450 employees and generated €172 million in 2014. Mark Donegan, the chief executive of PCC, confirmed the deal to Handelsblatt but declined to disclose the purchase price or provide specifics about the acquisition. Mr. Donegan said PCC is looking for additional acquisitions in the aviation and energy sectors.
“He is looking for companies that have proven themselves on the market over many decades and have developed a brand.”
Zypora Kupferberg,, Kupferberg Transactions
The acquisition of Wilhelm Schulz is part of Mr. Buffett’s growing interest in Germany’s mid-sized business segment. Mr. Buffett sent his portfolio manager, Ted Weschler, to Germany in December to look for potential acquisition candidates. Zypora Kupferberg, founder of Kupferberg Transactions, has been helping Mr. Weschler scout out companies in Germany. Ms. Kupferberg said many of Germany’s family-owned companies have a profile that fits well with Mr. Buffett’s investment strategy. Mr. Buffett, the second-richest man in the world with a fortune of $74 billion, is known for investing in companies for the long haul and taking a hands off approach to their operations. Berkshire Hathaway has $85 billion at its disposal. “He is looking for companies that have proven themselves on the market over many decades and have developed a brand,” Ms. Kupferberg told Handelsblatt. “There are many such companies particularly in Germany.” The Federal Cartel Office, Germany’s anti-trust regulator, still has to approve the Wilhelm Schulz deal. The acquisition would include the company’s U.S. subsidiary in Mississippi, Schulz Xtruded Projects, which manufactures seamless steal pipes and material for the aviation industry. Wilhelm Schulz is being advised by Munich-based Fox Corporate Finance, a firm that specializes in mid-sized companies. No investment banks are involved in the transaction, according to Handelsblatt sources close to the negotiations. Mr. Buffett is known for his unconventional business practices and his low regard for investment banks.
Mr. Buffett’s portfolio manager, Ted Weschler, is searching for companies with pre-tax profits of €50 million or more.
Berkshire’s acquisition of Wilhelm Schulz is considered a wise move by industry analysts. Stainless steel products made by the company have applications in the oil, gas and aviation industries. In the Middle East, there’s a growing demand for corrosion resistant vents and pipe components made out of stainless steel to handle sour crude oil that is high in sulfur content. If the deal receives the green light by regulators, it would be the second acquisition by Berkshire Hathaway in Germany in the past two years. Berkshire Hathaway purchased the motorcycle parts company Louis, based in Hamburg, for €400 million in 2015. Mr. Buffett told Handelsblatt in a previous interview that he wants to purchase more companies in Germany. He announced at Berkshire Hathaway’s annual meeting in May that he plans to make at least one more acquisition in Germany by 2020. Mr. Buffett’s portfolio manager, Ted Weschler, is searching for companies with pre-tax profits of €50 million or more. In September, Mr. Weschler started a partnership with German savings banks to find the right companies. Many private equity investors, both foreign and domestic, are interested in Germany’s mid-sized business sector, which is traditionally dominated by machine manufacturers, auto parts suppliers and chemicals specialists. According to estimates, however, only 50 transactions are completed every year.
Source :
https://global.handelsblatt.com/finance/warren-buffett-strikes-again-in-germany-687540