As consumer electronics have become more popular in recent years, rechargeable batteries have become far more prevalent. Regardless, sales of Duracell’s products and those of the firm’s closest rival Energizer Holdings have both been adversely affected by the increasing popularity of rechargeable batteries. The firm is believed to be close to securing deals to sell another 10 of its brands.ĭespite P&G’s decision to divest the business, Duracell is still the world’s leading battery manufacturer, posting annual sales of around $2.2bn. Prior to the agreed Duracell sale in September 2014, P&G agreed a deal to sell a number of its pet food units, including the Iams and Eukanuba dog and cat food brands to Spectrum Brands Holdings Inc. P&G has demonstrated in its divestitures that it is not afraid to divest high profile businesses. Once the company has completed its divestitures, P&G intends to focus on a core group of 80 or so brands, those which generate the majority of the company’s revenue and profit. Berkshire’s acquisition of the business was confirmed just a few weeks later. P&G only announced that it was spinning off the business on 24 October, as part of an effort to trim the number of brands the firm offers. “Duracell is a leading global brand with top quality products, and it will fit well within Berkshire Hathaway.”įor Berkshire, the deal to acquire the Duracell business was a short time in the making. “I have always been impressed by Duracell, as a consumer and as a long-term investor in P&G and Gillette,” commented Warren Buffett, Berkshire’s chief executive. Berkshire had previously been the company’s fifth largest shareholder. The way that the deal for Duracell has been structured means that Berkshire will essentially cash out its entire holding in the P&G business. By completing the deal in this manner, Berkshire is able to avoid a potentially large tax bill which would have been payable had the firm sold its shares in P&D directly. The deal is expected to close in the second half of 2015, subject to regulatory approval and customary closing conditions. According to a statement announcing the deal, P&G will be required to recapitalise the Duracell unit with a cash injection of around $1.8bn before the transaction closes. The price Berkshire will be paying for the brand is about seven times the company’s earnings before interest, taxes, depreciation and amortisation, or nine times Duracell’s cash sale value. Under the terms of the agreement, rather than paying cash for the unit Berkshire will fund the purchase using $4.7bn worth of shares that the firm owns in P&G.
Private equity giant Berkshire Hathaway Inc announced in mid-November that it had agreed to acquire the Duracell battery business of Procter & Gamble (P&G) in a complex deal worth approximately $4.7bn.
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