Warren Buffett's Berkshire Hathaway said it would buy Procter & Gamble's Duracell battery unit in a stock swap, taking over a business the billionaire has supported for nearly two decades.
The transaction calls for P&G to receive about $4.7 billion of its own shares that Berkshire now owns. P&G would infuse $1.8 billion in cash into Duracell before the expected closing in the second half of 2015.
Chief executive AG Lafley is streamlining the Cincinnati-based P&G by shedding slow-growing brands and focusing on about 80 businesses that generate most of its profit and revenue. Tide laundry detergent and Pampers nappies are among its better-known products.
The addition of Duracell, whose batteries are known for their copper-coloured tops, gives Mr Buffett a familiar name to add to Berkshire's stable of more than 80 businesses, including Benjamin Moore paint, the Dairy Queen fast-food chain and Heinz ketchup.
Also, Mr Buffett would avoid a big tax bill that his Omaha, Nebraska-based company might incur if it sold its P&G shares on the open market.
Berkshire has said it paid just $336 million for its 1.9 per cent stake in P&G, which totalled about 52.8 million shares as of June 30.
The Duracell purchase is a “brilliant move” for Mr Buffett, said Doug Kass, who runs Seabreeze Partners Management in Palm Beach, Florida. “Warren loves mature and durable consumer brands that produce predictable cash flow. Duracell fits the bill.”