The Oracle of Omaha has cut Wall Street out of advising on his latest deal.
Warren Buffett isn’t using any investment bankers on his $US235-a-share, $US37 billion deal to buy Precision Castparts, announced Monday morning August 10.
A deal of that size would normally have $US50 million and $US60 million in advisory banking fees, according to Jeffrey Nassof, vice president of consulting services with Freeman & Co.
This should come as no surprise.
Buffett has typically avoided using banks in his M&A transactions. The last Berkshire Hathaway deal that made use of an advisory bank was its $US5.1 billion acquisition of PacifiCorp in 2005, according to Freeman & Co.
He won’t be able to duck Wall Street entirely however.
In an interview Monday morning with CNBC, Buffett said that he would finance about $US10 billion of the deal in the bond markets.
That is similar to his acquisition in late 2009 of railroad Burlington Northern Santa Fe Corp.; Berkshire Hathway placed $US8 billion in debt as part of that transaction.
Nassof says Buffett and Berkshire will likely pony up about $US25 million in fees for the financing.
Specifics on the $US10 billion in debt financing weren’t included as part of the Precision acquisition announcement.