Berkshire News Briefs - 11/13/14

Berkshire Hathaway Inc. Earnings: Don't Trust the Headlines (Fool)

Consider the coverage from Businessweek, headlined "Berkshire Profit Slips on Buffett's Tesco 'Mistake'," or the report by Fortune, titled "Berkshire Hathaway Earnings Take a Dip on Investments." Although those are factual realities about Berkshire's third quarter, the problem is, they don't tell the whole story. As it turns out, investors have no absolutely no cause for concern.

Warren Buffett’s Berkshire to Buy Duracell From Procter & Gamble (NY Times Dealbook)

Instead of simply being spun out from Procter & Gamble, Duracell will find a new corporate home – with Warren E. Buffett. The conglomerate run by the billionaire, Berkshire Hathaway, said on Thursday that it would acquire Duracell from P.&G. through an unusual transaction aimed at lowering the overall tax bill.

Warren Buffett's Berkshire Hathaway buys Duracell batteries (CNN)

Warren Buffett's Berkshire Hathaway has agreed to buy the Duracell battery brand from Procter & Gamble in a multi-billion dollar deal. Berkshire Hathaway announced Thursday morning it will make the purchase using about $4.7 billion in P&G stock. The consumer products giant also committed to pump $1.8 billion in cash into Duracell. The amount means Buffett is virtually cashing out his entire P&G holding to buy the battery brand. That holding had made him the fifth-largest shareholder in Procter & Gamble. [...] P&G bought Duracell back in 2005 as part of its $57 billion acquisition of Gillette. Who did they buy it from? Berkshire Hathaway, which at the time was the largest shareholder in Duracell's then-owner.

Buffett Set to Save More Than $1 Billion on Taxes in Swap (Bloomberg)

For the third time in a year, the billionaire chairman of Berkshire Hathaway Inc. has structured a deal in which he buys businesses in exchange for stock that has appreciated. The transactions, called cash-rich split-offs, allow him to avoid capital gains taxes that would be incurred if he sold the shares in the open market. Berkshire announced today that it would turn over about $4.7 billion in Procter & Gamble Co. stock in exchange for P&G’s Duracell battery business, which will be infused with about $1.7 billion in cash. Since Buffett’s cost basis on the shares was about $336 million, and corporate capital gains are typically taxed at 35 percent, structuring the deal in this way could save Berkshire more than $1 billion.

Buffett Said He Paid a Lot. $15 Billion Later, BNSF Is a Cash Machine. 'He Stole It' (Bloomberg)

Days after Warren Buffett announced his $26.5 billion buyout of railroad BNSF, he insisted that he’d paid a steep price to own a business that would benefit his company, Berkshire Hathaway Inc., over the next century. [...] Five years later, that assessment rings a bit hollow. Buoyed by an onshore oil boom, BNSF has become a cash machine for Buffett. The railroad had sent more than $15 billion in dividends to Berkshire through Sept. 30, according to quarterly regulatory filings, the latest of which was released last week. More stunning: The business is on pace to return all the cash Buffett spent taking it private by the end of this year.

BNSF profit is up, but volume held back by congestion (Omaha World Herald)

BNSF Railway, employer of 5,000 people in Nebraska, said third-quarter profit rose 5 percent, with freight volume falling 1 percent as congestion continues to strain the company’s rail network. [...] net income was $1 billion, up from $989 million, a year earlier. Revenue rose 4 percent to $5.8 billion. Freight volumes fell in three of the railroad’s four categories, as crew, locomotive and railcar shortages coupled with record grain harvests and crude oil production from North Dakota have led to shipping delays. The harsh winter and spring floods also hurt the nation’s railroads in getting trains to customers on time. To speed improvements, BNSF said in its quarterly update that it has budgeted $500 million more for capital improvements, on top of the $5 billion already allocated.

Burger King tests India waters, starts with 12 outlets (CNBC)

U.S. fast food chain Burger King Worldwide will open about 12 outlets in India over the next 60-90 days, Rajeev Varman, chief executive of the hamburger chain's India unit said on Saturday. [...] In India, the hamburger chain has changed its menu to sell mutton, chicken and veggie sandwiches. [...] Burger King is a late entrant in the country. Rival McDonald's Corp has been around for close to two decades and has already grown its network in tier two and three cities.