Warren Buffett shuns Wall Street advisers on latest megadeal

Business Insider August 10, 2015 0

Bill Pugliano / Getty Try 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 $235-a-share, $37 billion deal to buy Precision Castparts, announced Monday morning August 10.

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 $235-a-share, $37 billion deal to buy Precision Castparts, announced Monday morning August 10.

A deal of that size would normally have $50 million and $60 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 $5.1 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 $10 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 $8 billion in debt as part of that transaction.

Nassof says Buffett and Berkshire will likely pony up about $25 million in fees for the financing.

Specifics on the $10 billion in debt financing weren’t included as part of the Precision acquisition announcement.


Article originally posted in Business Insider website.

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