Precision Castparts Corp. (PCP:US) jumped to a record high after the maker of metal forgings for jet engines agreed to purchase Permaswage SAS for $600 million in cash.
The acquisition, announced yesterday, adds Permaswage’s aerospace fluid fittings to Precision’s aviation parts offerings. Portland, Oregon-based Precision rose (PCP:US) 2.7 percent to $225.66 at 12:03 p.m. in New York, after reaching $226.82, the highest intraday price since at least 1983, Bloomberg data show.
Chief Executive Officer Mark Donegan has been on a buying spree, targeting about 10 takeovers within the last year, according to data compiled by Bloomberg. Planemakers Boeing Co. (BA:US) and Airbus SAS have urged suppliers to consolidate to help support record increases in jet output.
Precision “has a tried and tested acquisition strategy, and we think the potential upside to EPS from this increased aerospace exposure is likely to be well received,” Robert Stallard, an analyst at RBC Capital Markets in New York, wrote in a note to investors.
Stallard rates the shares as top pick, the equivalent of a buy recommendation.
The Permaswage transaction will add to Precision’s earnings immediately and is projected to be completed during the second quarter of 2014, according to a statement yesterday.
Closely held Permaswage, based in Gardena, California, has manufacturing locations in Paris and in Suzhou, China, and employs about 680 workers.
In November, Precision agreed to buy Titanium Metals Corp. for $2.9 billion after buying pipe processor Texas Honing Inc. the month before.
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