Thursday, November 13, 2014
Buffett buys Duracell with PG stock swap
This time, Warren Buffett took it. Why not? He swapped Berkshire's 52.8 million shares of P&G for the business. And P& G threw in $1.8 billion of cash!
Wall Street thinks that no-one needs non-rechargeable batteries because of smartphones.
So what does that mean--that Christmas toys won't run on batteries? Which is why Buffett bought Duracell.
When Buffett bought Burlington Northern 5 years ago for $27 billion, Wall Street thought he paid too much. 5 years later, Burlington Northern has already earned back $27 billion.
Now Wall Street will tell you that Burlington was only able to make that much money, because the Keystone Pipeline wasn't approved, and that Nebraska stood in its way, and therefore Burlington profited by shipping oil on rails.
Of course, Wall Street won't tell you that Burlington spent $4 billion lat year on Capex, so they can continue to make their own fortune.
Now it will be the same as Duracell.
It will be a brand that will be around for ever-a perfect company for his portfolio.
And five years later, when it pays for itself, Wall Street will have another excuse!
Posted by Palmoni at 8:22 AM