Forbes.com
Buffett's Battery Bet
Paul Maidment 09.28.08, 10:02 AM ET
Warren Buffett is buying batteries.
Through MidAmerican Energy Holdings Co. he is paying $230 million for a 10% stake in BYD, China's largest maker of rechargeable batteries.
BYD batteries are principally used in mobile phones, for which it also makes handset components. But it has aspirations to use its rechargeable lithium battery technology to become a green car company.
BYD plans to start selling its first all-electric car in China next year and to start selling gasoline-electric hybrids in the U.S. and Europe by 2010. BYD short circuited the difficult process of getting government permission to build cars by buying bankrupt state-owned automaker Qinchuan in 2003 to be the basis of its car-making division, BYD Auto.
The deal with MidAmerican will be unveiled in Hong Kong, where BYD is listed, on Monday. Details became known late Friday.
BYD is based in Shenzhen and has 130,000 employees worldwide. It had sales of $1.8 billion in the six months to June, up 44% for the same period a year earlier. Profit after tax was up 15% at $108 million, as raw material costs surged for both its battery and handset components businesses.
Two-thirds of BYD's sales are in China. The company's chairman, Wang Chuanfu, said in a statement that the investment from MidAmerican will help give BYD further access to global markets, particularly for its new electric vehicles and environmental protection products.
Buffett is getting his BYD stake at a tiny discount to Friday's closing price of HK$8.40. The stock hit a 52-week low of HK$6 on July 24 in the wake of Hong Kong's High Court dismissing in late June a request to halt a lawsuit filed by Foxconn International Holdings, the world's biggest contract maker of mobile phones, for allegedly stealing trade secrets.
Buffett's BYD stake isn't on the scale of the $5 billion he invested in Goldman Sachs earlier in the week, but he has a record of savvy China deals. He invested $488 million in PetroChina stock in 2002 and 2003. In 2007, he sold his stake for $4 billion.
Buffett's Battery Bet
Paul Maidment 09.28.08, 10:02 AM ET
Warren Buffett is buying batteries.
Through MidAmerican Energy Holdings Co. he is paying $230 million for a 10% stake in BYD, China's largest maker of rechargeable batteries.
BYD batteries are principally used in mobile phones, for which it also makes handset components. But it has aspirations to use its rechargeable lithium battery technology to become a green car company.
BYD plans to start selling its first all-electric car in China next year and to start selling gasoline-electric hybrids in the U.S. and Europe by 2010. BYD short circuited the difficult process of getting government permission to build cars by buying bankrupt state-owned automaker Qinchuan in 2003 to be the basis of its car-making division, BYD Auto.
The deal with MidAmerican will be unveiled in Hong Kong, where BYD is listed, on Monday. Details became known late Friday.
BYD is based in Shenzhen and has 130,000 employees worldwide. It had sales of $1.8 billion in the six months to June, up 44% for the same period a year earlier. Profit after tax was up 15% at $108 million, as raw material costs surged for both its battery and handset components businesses.
Two-thirds of BYD's sales are in China. The company's chairman, Wang Chuanfu, said in a statement that the investment from MidAmerican will help give BYD further access to global markets, particularly for its new electric vehicles and environmental protection products.
Buffett is getting his BYD stake at a tiny discount to Friday's closing price of HK$8.40. The stock hit a 52-week low of HK$6 on July 24 in the wake of Hong Kong's High Court dismissing in late June a request to halt a lawsuit filed by Foxconn International Holdings, the world's biggest contract maker of mobile phones, for allegedly stealing trade secrets.
Buffett's BYD stake isn't on the scale of the $5 billion he invested in Goldman Sachs earlier in the week, but he has a record of savvy China deals. He invested $488 million in PetroChina stock in 2002 and 2003. In 2007, he sold his stake for $4 billion.
1 comment:
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Bob Seetoh
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