Please ensure Javascript is enabled for purposes of website accessibility

Berkshire Hathaway-Owned Company Wins 643 Million Euros in European Arbitration Case

By Eric Volkman – Apr 16, 2020 at 6:45PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

An arbitration panel finds that Precision Castparts was a victim of fraud when it acquired a German peer.

One of the many companies held in the portfolio of Warren Buffett's investment vehicle Berkshire Hathaway (BRK.A -1.04%) (BRK.B -1.09%) is about to reap a big financial award. On Wednesday, Precision Castparts, which makes components used in the aircraft and oil and gas industries, was awarded 643 million euros ($703 million) in an arbitration hearing.

A panel of the American Arbitration Association's International Center for Dispute Resolution found that Precision Castparts had been fraudulently coaxed into buying Schulz Holding, a Germany-based manufacturer of pipes and fittings. In February 2017, Precision Castparts agreed to pay 800 million euros ($874 million) for the German company. 

Warren Buffett.

Image source: The Motley Fool.

Arbitration proceedings on the matter started in early 2018, with Precision Castparts claiming that Schulz Holding exaggerated its revenue and profitability through fraudulent means such as fake invoices. Schulz Holding denied those claims.

In its 132-page ruling, the arbitration panel characterized the dispute as a nearly open-and-shut case. "The evidence strongly points to fraud, and there is little in the record to suggest otherwise," it wrote in the ruling.

Berkshire Hathaway hasn't commented on the outcome or on the monetary award. Buffett's company bought Precision Castparts in a splashy, $32 billion-plus deal that was agreed to in mid-2015. It was and remains Berkshire's most expensive acquisition. Today, Precision Castparts belongs to Berkshire's portfolio of fully owned companies.

Both classes of Berkshire stock declined a bit more precipitously than the key stock market indexes on Wednesday. The company's A shares fell by 2.1%, while class B dropped 2.1%.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Berkshire Hathaway (B shares) and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), and short June 2020 $205 calls on Berkshire Hathaway (B shares). The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Berkshire Hathaway Inc. Stock Quote
Berkshire Hathaway Inc.
BRK.A
$416,300.00 (-1.04%) $-4,367.49
Berkshire Hathaway Inc. Stock Quote
Berkshire Hathaway Inc.
BRK.B
$276.31 (-1.09%) $-3.05

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
338%
 
S&P 500 Returns
108%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/07/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.