Berkshire Hathaway will acquire Duracell, a subsidiary of Proctor & Gamble, in exchange for shares of Proctor & Gamble currently owned by Berkshire Hathaway. The transaction is expected to close in the second half of 2015.
Berkshire’s stock ownership in P&G is currently valued at approximately $4.7 billion. P&G said it expects to contribute approximately $1.8 billion in cash to the Duracell Company prior to the close of the transaction. The value received for Duracell in the exchange is approximately 7x fiscal year 2014 adjusted EBITDA. This equates to a cash sale valued at approximately 9x adjusted EBITDA.
“I have always been impressed by Duracell, as a consumer and as a long-term investor in P&G and Gillette,” said Warren Buffett, Berkshire Hathaway chief executive officer. “Duracell is a leading global brand with top quality products, and it will fit well within Berkshire Hathaway.”
The P.R. Mallory Company introduced the Duracell brand in 1964. P.R. Mallory was acquired by Dart Industries in 1978, which in turn merged with Kraft in 1980. Kohlberg Kravis Roberts bought Duracell in 1988 and took the company public in 1989. It was acquired by Gillette in 1996. In 2005 Procter & Gamble acquired Gillette.
Today, Duracell is a manufacturer and marketer of alkaline batteries in many common sizes, such as AAA, AA, C, D, and 9V. Lesser-used sizes such as AAAA (primarily for pagers, penlights, and blood glucose meters) and J size batteries (for hospital devices and photographic strobe flash units) are also manufactured along with a range of “button” batteries using zinc-air, silver-oxide and lithium chemistries, used in calculators, watches, hearing aids, and other small (mostly medical related) devices. Duracell batteries are also bulk packaged for end users under the brand name Procell. Duracell is based in Bethel, CT (www.duracell.com).
Goldman Sachs & Co. is acting as financial advisor to Proctor & Gamble.
2014 PEPD • Private Equity’s Leading News Magazine • 11-13-14
