More than two years after acquiring PCC Warren Buffett has no regrets (US)

More than two years after acquiring Precision Castparts Corp. at a cost of $37.2 billion, Berkshire Hathaway Inc.’s leadership has no regrets — about the acquisition, or the man in charge of the company. At the conglomerate’s annual meeting in Omaha this past weekend, a questioner suggested Portland-based Precision was losing “pre-eminence” as an aerospace industries supplier and performing weakly, and asked about its long-term outlook. “Longer term, and in the shorter term, it’s a very, very good business,” Berkshire Chairman Warren Buffett said. Buffett said that Precision does a lot of deals with very long lead times, and highlighted an annual earnings charge of around $400 million for “amortization of goodwill, which is really not an economic cost.”“So whatever you see, you can add about $400 million that, in my view, is not an economic expense,” he said. “The accountants would argue otherwise, but it’s our money, so we’ll take my view.” Buffett went on to praise CEO Mark Donegan. “Mark Donegan, who runs that operation, is incredible,” Buffett said. “And he has been not only a fabulous manager — I wouldn’t have bought it without him in charge — he also has been very helpful to us in other areas. And he loves to do it. So you can’t beat him, both as a manager of his own operation but with his devotion and really doing everything that will help Berkshire.” Buffett wrapped up his three-minute answer by saying, “It’s a very good acquisition with very long tails to the products that are being developed.” Then he turned to his longtime right-hand man, Charlie Munger. “Well, I think we’d buy another just like it tomorrow if we had the chance,” Munger said bluntly. “Yeah, that’s the answer,” Buffett said to laughter. “Man of few words, but he gets the point.”

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Posted in Merger & Acquisition.

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