Berkshire Hathaway to Acquire the Duracell Battery Business from Procter & Gambl

[Guest longinvestor]

 

BYD, Duracell, MidAmerican, Exxon...any convergence?

 

http://theenergycollective.com/jessejenkins/236951/got-solar-panel-then-wire-dc-circuit

 

The paradigm shift away from AC towards DC generation/transmission/storage. The world is moving in this direction anyway.

 

OK, enough of the excitement, time to return to boring BRK.

 

 

So say over the next few decades the whole global energy infrastructure shifts quite rapidly and massively until everyone has their own big storage batteries at home and in their cars, how much new demand (as you're pointing out) will there be for batteries?

 

If you think that solar energy and battery storage will be cheaper than rival energy infrastructures for first-time users in Africa, India and other places, then what is the opportunity for good businesses with battery expertise?

I mean, that's already a few billion currently (pun not intended) unserved customers right there...

 

With a brand like Duracell and a demand curve shaped like that, it wouldn't surprise me to find in 10 or 20 years that P&G had basically given this business away.

 

I'll just add this UBS report to your post, since it reiterates how big the global battery market is likely to become in the not too distant future.

 

Global Utilities, Autos & Chemicals: Will Solar, Batteries and Electric Cars re-shape the Electricity System?

 

http://knowledge.neri.org.nz/assets/uploads/files/270ac-d1V0tO4LmKMZuB3.pdf

 

Like others have noted, the possible synergies between BYD and Duracell is easy to envision.

 

Also, with the large solar farms in NV, CA, AZ, DC power generated from PV can/should be transmitted by DC grids. I recently met with an Engineering Professor friend who has spent his lifetime working on Solar research and that community cannot wait for DC power transmission to become the norm. There are apparently many benefits. I did google the subject and there are several US states that have this already, in pockets. So have, Russia, Germany and several EU states. Who else but BH Energy, already the largest in the western USA & soon to be the largest Utility in the US, to capitalize on the DC grid? I have not researched AltaLink's involvement in DC grids but plan to read up on that. Smell something there as well. Anyway, if capital is the limiting factor, no issues at BHE.

 

I'm highly skeptical that the utility model of power generation and transmission is dying anytime soon. "everyone has a battery in their yard" is a long time (if ever) away. Perhaps myth created by the Tesla investors:-)

 

[Guest ajc]

 

 

http://www.duracellpower.com/backup-power/uninterrupted-power/powersource-1800.aspx

 

 

 

After seeing your post, I read a somewhat intriguing thing about lead acid batteries.

In the comments section of this article - http://insideclimatenews.org/news/20120524/renewable-energy-battery-storage-cleantech-utilities-cuny-zinc-solar-wind-farms-dendrites-duracell - someone points out that Exide makes a deep cycle, valve-regulated lead acid battery that lasts for 10 years and costs $200/kWh (as of 2012).

It would be nice to know how much a patent like that might cost Duracell, since they've already said before that they'd be prepared to buy some.

 

For anyone who is interested, I also found these links to be relevant to Duracell's future - http://eetd.lbl.gov/news/article/57690/calcharge-announces-first-corpo & http://www.usnews.com/news/articles/2014/11/17/warren-buffetts-duracell-purchase-may-boost-wireless-charging.

 

 

 

[ERICOPOLY]

I'm highly skeptical that the utility model of power generation and transmission is dying anytime soon. "everyone has a battery in their yard" is a long time (if ever) away. Perhaps myth created by the Tesla investors:-)

 

 

I perhaps had a chance of becoming grid independent if I had covered my house in solar panels -- but then once my Tesla came home, any chance of that is permanently gone.  Now, if my wife also had a Tesla it would be ridiculous how grid dependent we would be. 

 

Think about that... with two Teslas and each charging 85 kWh batteries, we'd be using over 200 kWh some days!!!

 

There is absolutely NO CHANCE that we'll stop needing the grid if we all get Teslas.

 

So what is that you were saying about Tesla investors?

 

[Liberty]

I think the problem for power utilities isn't that the grid won't be needed all of a sudden. It's that their most profitable sales will be shaved off by solar (ie. solar produces lots of power during the day when utilities make moost of their money, and none at night when spot rates are super low).

 

This is already happening in some parts of Australia where solar rooftop PV has boomed in the past few years. Can't imagine what it'll be in a decade when solar is much cheaper, with all the capacity installed in between being cumulative.

[Guest longinvestor]

I'm highly skeptical that the utility model of power generation and transmission is dying anytime soon. "everyone has a battery in their yard" is a long time (if ever) away. Perhaps myth created by the Tesla investors:-)

 

 

I perhaps had a chance of becoming grid independent if I had covered my house in solar panels -- but then once my Tesla came home, any chance of that is permanently gone.  Now, if my wife also had a Tesla it would be ridiculous how grid dependent we would be. 

 

Think about that... with two Teslas and each charging 85 kWh batteries, we'd be using over 200 kWh some days!!!

 

There is absolutely NO CHANCE that we'll stop needing the grid if we all get Teslas.

 

So what is that you were saying about Tesla investors?

 

I misquoted. Meant to say Solar City, not Tesla. Elon Musk is great and all that but a big part of what goes on around him is the investment hype around his ideas. That same hype creating machine behind Tesla, the stock appears to be behind Solar City, rooftop solar, storage etc. To me at least. Ex. this idea of giant batteries sitting in everyone's yard, and very soon.

[ERICOPOLY]

I'm highly skeptical that the utility model of power generation and transmission is dying anytime soon. "everyone has a battery in their yard" is a long time (if ever) away. Perhaps myth created by the Tesla investors:-)

 

 

I perhaps had a chance of becoming grid independent if I had covered my house in solar panels -- but then once my Tesla came home, any chance of that is permanently gone.  Now, if my wife also had a Tesla it would be ridiculous how grid dependent we would be. 

 

Think about that... with two Teslas and each charging 85 kWh batteries, we'd be using over 200 kWh some days!!!

 

There is absolutely NO CHANCE that we'll stop needing the grid if we all get Teslas.

 

So what is that you were saying about Tesla investors?

 

I misquoted. Meant to say Solar City, not Tesla. Elon Musk is great and all that but a big part of what goes on around him is the investment hype around his ideas. That same hype creating machine behind Tesla, the stock appears to be behind Solar City, rooftop solar, storage etc. To me at least. Ex. this idea of giant batteries sitting in everyone's yard, and very soon.

 

Giant batteries are going to make RVs (and boats) really cool.  No more noisy generators!  Just silence.

 

And think of those laborer guys who work jobs everyday with their pickup trucks -- they just run their power tools off of the truck.

 

On houses like mine, they make a lot of sense.  I will be the first customer -- it would pay for itself so quickly given my electric billing situation (9 cents per kWh to charge it at night, and then that stored energy offsets my daytime usage when I currently get charged 49 cents per kWh).

[Guest longinvestor]

I think the problem for power utilities isn't that the grid won't be needed all of a sudden. It's that their most profitable sales will be shaved off by solar (ie. solar produces lots of power during the day when utilities make moost of their money, and none at night when spot rates are super low).

 

This is already happening in some parts of Australia where solar rooftop PV has boomed in the past few years. Can't imagine what it'll be in a decade when solar is much cheaper, with all the capacity installed in between being cumulative.

 

The rates-intermittency issue will start playing out close to home, rather soon. BH energy, notably NV energy, PacifiCorp et al enter the CaISO's sub-hour energy trading regime in 2015. This will be interesting to watch. There is a thought I've read that consolidation of the fragmented utilities across the western states will happen. There is a lot of nervousness amongst the traditional players to real time market pricing.  And energy storage will also become important. We will see.

[Guest longinvestor]

I'm highly skeptical that the utility model of power generation and transmission is dying anytime soon. "everyone has a battery in their yard" is a long time (if ever) away. Perhaps myth created by the Tesla investors:-)

 

 

I perhaps had a chance of becoming grid independent if I had covered my house in solar panels -- but then once my Tesla came home, any chance of that is permanently gone.  Now, if my wife also had a Tesla it would be ridiculous how grid dependent we would be. 

 

Think about that... with two Teslas and each charging 85 kWh batteries, we'd be using over 200 kWh some days!!!

 

There is absolutely NO CHANCE that we'll stop needing the grid if we all get Teslas.

 

So what is that you were saying about Tesla investors?

 

I misquoted. Meant to say Solar City, not Tesla. Elon Musk is great and all that but a big part of what goes on around him is the investment hype around his ideas. That same hype creating machine behind Tesla, the stock appears to be behind Solar City, rooftop solar, storage etc. To me at least. Ex. this idea of giant batteries sitting in everyone's yard, and very soon.

 

Giant batteries are going to make RVs (and boats) really cool.  No more noisy generators!  Just silence.

 

And think of those laborer guys who work jobs everyday with their pickup trucks -- they just run their power tools off of the truck.

 

On houses like mine, they make a lot of sense.  I will be the first customer -- it would pay for itself so quickly given my electric billing situation (9 cents per kWh to charge it at night, and then that stored energy offsets my daytime usage when I currently get charged 49 cents per kWh).

As a shareholder, I'm backing battery operated locomotives to slash the $4 Billion fuel cost at BNI. Perhaps charging or battery swapping stations colocated with Solar farms owned by BH Energy

 

I've no interest in buying a Tesla car myself anytime soon. Need to see 200 mile range for less than $30,000.

[nielfiel]

I'm looking for Duracell financials, anyone have a location for them?

[gfp]

They are not broken out separately in P&G's financial statements.  They are referred to as "Personal Power" within Fabric and Home Care.  They have about 25% market share, I believe, and you may be able to glean some useful information from Energizer's financials.

 

Reports have said that Duracell has about $2.2 Billion in annual sales and low to zero growth.  They will be buried within Marmon's results after the acquisition, so it will be hard to ever get exact figures.  I suspect they were purchased for a low multiple to free cash flow after all the tax savings and cash are accounted for.

 

from P&G's announcement:

"Berkshire’s stock ownership 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 in the pre-transaction recapitalization.

 

P&G said the transaction maximizes the after-tax value of the Duracell business and is tax efficient for P&G. The value received for Duracell in the exchange is approximately 7-times fiscal year 2014 adjusted EBITDA. This equates to a cash sale valued at approximately 9-times adjusted EBITDA."

 

You could check the P&G 4th quarter filing to see if there is detail to be learned from Discontinued Operations.

[gfp]

Here is the page from the 10Q with the most detail -

pg_10Q_batteries.pdf

[ZenaidaMacroura]

if Berkshire was ever interested in buying something from me, I'd probably reevaluate what I own, and end up deciding not to sell...