Warren Buffett shuns Wall Street advisers on latest megadeal

Warren buffettBill Pugliano / GettyTry as he might, Warren Buffett is going to have to shell out money to Wall Street.

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.

Buffett has also been a vocal critic of Wall Street bankers, calling them “money-shufflers” who produce “huge fees.”

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.

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