Buying Duracell will provide a short-term charge for Warren Buffett’s company, but the battery maker eventually could be a drain on Berkshire Hathaway Inc. as consumers increasingly rely on rechargeable batteries.
Duracell is being sold for roughly $3 billion because Procter & Gamble Co. doesn’t consider it one of its top-performing consumer products companies.
“It’s a declining business, which was dragging down the overall growth at Procter,” said Joseph Agnese, an analyst for S&P Capital IQ. He said Duracell’s disposable battery sales have been shrinking 2 to 4 percent per year. Still, demand remains for the single-use batteries that power TV remotes, purring animated cats and other electronic toys.
And some experts say there is opportunity for Duracell if it can find ways to sell more rechargeables and tap into the market for large batteries used in vehicles and on the power grid. With Berkshire Hathaway’s resources, which included $62.4 billion cash at the end of September, and its 10 percent stake in Chinese carmaker BYD, it’s tempting to think of this deal as a play on electric vehicles, said Jeff Chamberlain, who helps direct energy storage research at the Argonne National Laboratory. “I can’t help but hope that this is going to turn into something that will aim at the bigger picture.”
Duracell has been developing lithium-ion batteries for some time, Chamberlain said, and it is a small player in the market for those rechargeable batteries.
