In 2005 Procter & Gamble acquired Duracell, which is the current global battery market leader, as part of a $50bn acquisition of Gillette.
In exchange for a recapitalized Duracell company, which will include approximately $1.7 billion in cash at closing, P&G will receive shares of P&G’s common stock currently held by Berkshire Hathaway having a current value of approximately $4.7 billion. The transaction is expected to close in the second half of 2015 and is subject to obtaining various regulatory approvals as well as certain other customary closing conditions.
P&G has attempted to sell the battery business at different times since 2007. P&G said in October that it would most likely split off the business next year to shareholders, allowing them to exchange some of their P&G stock for a stake in a stand-alone Duracell company.
The unusual nature of the acquisition which involves Berkshire Hathaway selling the $4.7bn shares it owns in Procter & Gamble back to the US giant is aimed at reducing the overall tax bill Berkshire Hathaway will have to pay.
Warren Buffett declared during the summer that he was on the look out for big brand name business to acquire. Only last month Berkshire Hathaway sold more than 245 million shares in the global supermarket brand Tesco saying that the decision to invest in Tesco had been a “huge mistake”.
Buffett has built his almost legendary investment reputation by for taking long-term bets on established companies rather than investing in riskier stocks.
Duracell is a major manufacturer of alkaline batteries in many common sizes including AAA, AA, C, D, and 9V. Duracell also manufactures a variety of specialty batteries, including NiMH rechargeable batteries and batteries for cameras, watches, hearing aids and such like. Duracell also produces a line of lithium chemistry batteries and products. In 2013 the company released the company ‘Duracell Quantum’ line as the company’s top-performing product series.
“I have always been impressed by Duracell, as a consumer and as a long-term investor in P&G and Gillette,” commented Warren E. Buffett, Berkshire Hathaway chief executive officer. “Duracell is a leading global brand with top quality products, and it will fit well within Berkshire Hathaway.”
Source: http://www.electronics-eetimes.com/en/warren-buffett-plugs-into-duracell-in-usd4.7bn-deal.html?cmp_id=7&news_id=222922987&vID=209
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