Berkshire to Buy P&G’s Duracell for $4.7 Billion of Stock

By Lauren Coleman-Lochner and Noah Buhayar

Berkshire Hathaway Inc. (BRK/A) agreed to buy the Duracell battery business from Procter & Gamble Co. (PG) in Chairman Warren Buffett’s latest stock swap.
Berkshire will turn over $4.7 billion of P&G shares held by Buffett’s Omaha, Nebraska-based company, according to a Business Wire statement today. Duracell will have about $1.7 billion in cash when the deal is completed, which is expected in the second half of next year, according to the statement.
The exchange may help Berkshire cut its holding in Cincinnati-based P&G without incurring the tax costs of selling shares in the open market. Buffett became one of P&G’s biggest shareholders through an investment in Gillette Co. P&G bought the razor maker in 2005 in a $57 billion deal that the Berkshire chairman supported. Berkshire held more than 100 million shares as recently as
2008 and cut the stake several times since then as the consumer-goods company faltered under previous Chief Executive Officer Bob McDonald.
“I have always been impressed by Duracell, as a consumer and as a long-term investor in P&G and Gillette,” Buffett said in the statement.
The world’s largest consumer-products company announced last month that it would divest Duracell. CEO A.G. Lafley has been streamlining the company, cutting expenses and selling non-core businesses. P&G sold its pet-food business and has said it will jettison up to 100 of its slower-selling brands.

Photographer: David Paul Morris/Bloomberg

Paying with shares would mirror two of Buffett’s transactions in the past year, when he swapped stock that had appreciated for operating businesses. He handed over a holding in Phillips 66 in February in exchange for its pipeline-flow-improver unit. In July, he swapped a stake in former Washington Post publisher, Graham Holdings Co., for cash, a Miami television station and Berkshire stock that Graham held.
Buffett had about 52 million P&G shares at the end of last year, a stake worth more than $4 billion. The shares cost about $336 million, according to Berkshire’s annual report.
(An earlier version of this story corrected the valuation.)