Graham Warwick/ATLANTA

FLIGHT SAFETY International (FSI) is to be acquired by US financier Warren Buffet, after the aviation-training company accepted a surprise take-over offer from his investment firm, Berkshire Hathaway. The cash and/or stock offer values the US-based company at $1.5 billion.

New York-based FSI says that it accepted Berkshire's unsolicited offer as it represented a premium on the company's share price. Buffet has offered $50 in cash or $48 in Berkshire stock for each FSI share. The training company's stock was trading at under $44 at the time of the offer, having slipped from a peak of $60 achieved earlier in the year.

Al Ueltschi, FSI's founder chairman, says that he will vote the 37% stake he and his family still hold in favour of the merger. Ueltschi, who is 78, will continue to run the company which he started in 1951 and built into the world's largest independent pilot-training company. FSI has been consistently profitable and it has substantial cash reserves.

"Flight Safety is a business I like, run by a man I like and admire," says Buffet, who holds about 40% of Berkshire, a $38 billion investment firm which owns substantial stakes in blue-chip companies such as American Express, Coca-Cola and Walt Disney. The firm's shares trade at around $32,000 each - the highest-valued stock on New York's Wall Street.

Berkshire's only other major aviation-related investment is a 10.2% stake in USAir, acquired in 1989, and subsequently acknowledged by Buffet as a mistake. He has stepped down from the board and is now trying to divest his holding in the US carrier.

Negotiations with FSI took less than two weeks, and the transaction is expected to be completed within three months. The offer limits the cash portion to 58% of the total, and is regarded by most analysts as a good deal for both FSI and Berkshire.

Source: Flight International