The billionaire investor is swapping his $4.7 bln stake in P&G for the consumer giant's Duracell unit. Antony Currie and Robert Cyran explain why Buffett's buying a declining business.
So the house Warren Buffett funny lost it. He's gonna he's full ger so a declining business from Procter & Gamble rob Ewing can now that's not in Chicago. And get its act she Warren Buffett might not. Completely lost applies distilled you miss it what do you think it's like it's its photo bad the key thing is Kay Warren Buffett looks. This is it for a lot to cash a check which is why he likes to buckle and don't miss out yeah exactly and then battery business is extremely generates tons of cash the problem is of course you know people are buying as many batteries you know like I don't have a walk in anymore and entry earlier I thought you probably still did it and they are very. Sitting is there anything about this is that he owns a big chunk. Procter gamble stopped right. So what he's doing is he's exchanging that for the Duracell business. Duracell is kicking in one point eight billion dollars of cash and the unit. And it's into seasonal give and about it putting integrating into the anyway she you know dissident more than cash can occur accrue in the future yes he's comfortable. An inch of things that both side it's tax free or attack ever period tax advantageous for both side. So Buffy think about it he's getting a cat in this cash rich business is not paying taxes on on the the crude but the game to me are from Procter and you know. Parking it was getting out as business and they're buying their stock back. And because they're being a tax free deal they get more cash and it right back where they stopped it works have both so in the end out about it but it does the business itself and what. When ABC's country but look at this cash into the county Milan is cash flow what were the that the justice statistics on this this but the business is declining you know pretty steadily. You don't know that exactly how fast can decline in the future to think about it you know things like consumer gadgets obviously along switching to lithium batteries. That mean I've been a case for things like smoke detectors for example united displays the bunch of them that's obviously not gonna I'm not gonna plug in and made our own things stadium monitors have all these all these sorts of businesses. They're gonna keep on doing this for quite a long time and and there's also incentive for manufacturers and have because. They've been on this they want for the lithium ion battery in their favor that there editing tools that it has been batted disposal batters and are so. This business probably will keep but the people who will. Go for another decade or two weeks and that's that's kind of fist time could cost him by the Warren Buffett's 21 direction up went decades. But probably not gonna have to go to the the cut off thanks so abusive that problem will be back tomorrow with more breaking news.