Berkshire Hathaway (NYSE:BRK.B) Gets Charged Up

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Duracell battery concept is being sold. Procter & Gamble (NYSE:PG), the original owners of the batter brand, is in the process of striking a deal worth $3 billion, with Warren Buffett’s Berkshire Hathaway (NYSE:BRK.B). P&G (NYSE:PG), which is currently the forerunner in the consumer product manufacturer, acquired Duracell back in 2005 and planned an offshoot of the battery brand. Quite recently, the company announced that it wanted to go ahead with making Duracell, a company on its own.

However, the deal has gone a little differently, as P&G (NYSE:PG) had planned. The brand is being sold to the Nebraska based Berkshire Hathaway (NYSE:BRK.B), under the terms that P&G (NYSE:PG) will get shares of stock that belongs to the company and are currently held by Berkshire Hathaway (NYSE:BRK.B). The current value of these shares sums up to approximately $4.7 billion. Off this amount, a total of $1.7 billion will be awarded to the Duracell brand, before closure of the deal.

Warner Buffett released a statement recently, on the offset of this deal and has shown his satisfaction with Duracell as a brand, and feels that P&G (NYSE:PG) and Gillette are safe bets to invest capital in.

P&G (NYSE:PG), the proud owner of products such as Tide washing powder and Pampers diapers is now trying to cut down on the long list of products that it currently manufacturers, and plans to focus on its top of the range products. The company plans to cut down to 70 or 80 brands, once it cuts down on the extensive list in its global franchises.

P&G (NYSE:PG) has had Berkshire Hathaway (NYSE:BRK.B) as a long time shareholder, since its acquisition of Gillette, nearly ten years ago. However, the Duracell procurement is bigger than that and Berkshire Hathaway (NYSE:BRK.B) may have to utilize the whole 52.48 million shares. This deal is estimated to cost $336 million to Berkshire Hathaway (NYSE:BRK.B).

Buffett is always looking for opportunities to extend Berkshire Hathaway (NYSE:BRK.B) and add to its ever growing list of brands. However, the $62.4 billion acquired at the end of Q3 will remain untouched.

Berkshire (NYSE:BRK.B) owns several other popular brands, and has over 80 names added to its list of ventures, with Fruit of the Loom, Helzberg Diamonds, Geico Insurance, as the most popular ones.

P&G (NYSE:PG) stated that it will take home nearly 28 cents per share for its current quarter, for the Duracell deal. This deal will be shook hands on towards the later part of the year 2015. P&G (NYSE:PG) shares have dipped by 88 cents, summing at $88.60, in trading before the market opened.

The deal is expected to do well for both contractors involved. Duracell is quite a popular brand that has drawn consumer satisfaction for a long time, and Berkshire (NYSE:BRK.B) can expect to generate good capital from this investment. The efforts of P&G (NYSE:PG) to sell its established brands helps the company to make good investments, and allows it to shed off extra weight to concentrate on its best yielding products.

 

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