Berkshire Hathaway, the conglomerate led by billionaire Warren Buffett, will buy Duracell from Procter & Gamble in a deal worth $4.7 billion. The deal could be finalized in the second half of next year.
“I have always been impressed by Duracell, as a consumer and as a long-term investor in P&G and Gillette,” said Warren Buffett.
The business conglomerate includes investment in areas such as insurance, utilities, railways, finance and retail, including Geico, Burlington Northern Santa Fe and Dairy Queen.
“It seems like it is at the right valuation versus our estimates,” said Ali Dibadj, an analyst at Sanford C. Bernstein & Co in New York. “However, I do not see it as a particularly good sign that Buffett is trading in his P&G shares for Duracell.”
In early August, Bloomberg announced that Procter & Gamble, the largest producer of consumer goods worldwide, was planning to sell or jettison about 100 brands, over the next two years to reduce costs and focus on the most important product lines.
The 70 to 80 brands that will remain in the portfolio of P&G accounted for 90 percent of sales and 95 percent of company profits in the last three years, said A.G. Lafley, P&G CEO. He said that he is re-evaluating the brand portfolio of the group which has already begun to restrict its operations.
Some of the most important brands of the company include Tide detergents, Pampers diapers, Crest toothpaste and Gillette razors.
Lafley said the group will be a smaller company and less complicated, which will be easier to operate. He later declined an interview, to identify brands that will be dropped.
“We’re clear-eyed about the challenges we face from external forces, like currencies. We will continue to accelerate and increase productivity savings, sharpen our strategies and strengthen our portfolio,” Lafley said in a separate statement.
Among the brands that could be sold include Ausonia, Discreet, Blend-a-Dent, Braun, Oral-B and Rindex, each one with sales below $100 million, believes Ali Dibadj.
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