Finance History | Duracell Plant, Cleveland, 29 February 2016 — P&G Shares Became a Battery Business

On 29 February 2016, Berkshire Hathaway completed its acquisition of the Duracell battery business from Procter & Gamble through an exchange of assets rather than a conventional cash purchase. Berkshire transferred 52,477,678 P&G common shares back to P&G and received 100 percent of Duracell's operating business. P&G also recapitalized Duracell with approximately US$1.9 billion in cash in 2016 dollars before the closing, so the asset Berkshire received included both an operating company and additional liquidity. At P&G's closing price of US$80.29 per share on 29 February 2016, the shares Berkshire surrendered had a market value of approximately US$4.21 billion in 2016 dollars. The transaction converted a liquid minority investment into complete ownership of a branded consumer-products manufacturer without requiring Berkshire to sell the P&G shares into the public market for cash first. For P&G, the exchange retired its own shares while separating a business it had decided not to retain, linking portfolio simplification to a reduction in shares outstanding. The companies structured the exchange as a tax-free reorganization, although financial-reporting and tax effects remained distinct and depended on the carrying values and tax bases of the assets transferred. Berkshire reported a pre-tax financial-reporting gain of approximately US$1.1 billion in 2016 dollars and a reduction of about US$750 million in its deferred income-tax liability in 2016 dollars from the exchange. Duracell brought a globally recognized battery brand, manufacturing assets and retail distribution, but brand strength still depended on product reliability, shelf placement, pricing and the ability to compete with private labels and changing device technology. The deal illustrates a capital-allocation route between holding and selling: appreciated stock can sometimes serve as acquisition currency when the issuer wants its shares back and owns a business the shareholder wants more. The Duracell plant on Mouse Creek Road in Cleveland anchors that exchange to productive assets rather than a stock certificate, marking the moment a block of P&G equity became a wholly owned battery operation inside Berkshire. Photo: Harrison Keely, CC BY 4.0, via Wikimedia Commons.