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MidAmerican and Berkshire Hathaway Take 10% Stake in BYD

27 September 2008

MidAmerican Energy Holdings Company, a Berkshire Hathaway Inc. subsidiary, will purchase 225 million shares, representing approximately a 10% interest, in China-based BYD Company Limited. BYD’s corporate focus is researching, developing, manufacturing and selling rechargeable batteries (Li-ion, Nickel batteries), automobiles, electric automobiles and related products. The investment is valued at 1.8 billion HK dollars, or approximately US$230 million.

The two companies will hold a joint press conference on Monday in Hong Kong.

We are thrilled to be partners with BYD and the people of China. Mr. Wang Chuanfu has an extraordinary managerial record, and we welcome the opportunity to work with him

—Warren E. Buffett, chairman and CEO of Berkshire Hathaway

We are extremely pleased and grateful that Berkshire Hathaway and MidAmerican will be our long-term investor and partner, as we bring our electric vehicles and other environmental protection measures to the global space.

—Wang Chuanfu, chairman of BYD Company Limited

September 27, 2008 in Brief | Permalink | Comments (7) | TrackBack (1)

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Comments

Perhaps China can make a street worthy PHEV at low cost to help supplant the US use of crude oil. Seems to be a good buy. ..HG..

Wow! Berkshire Hathaway has managed to get a 10% stake in BYD for $230m USD. To be sure, this is cheap for a company that in my opinion has the potential to become the largest industrial company on the planet in perhaps as little as 10 years from now (yes bigger than General Electric). Currently BYD employs 130,000 people up from zero when they started in 1995. They are on a fast track to become the largest producer of rechargeable lithium batteries on the planet and they own an auto industry that will be the biggest customer for these batteries in 2 to 4 years from now. If they are able to produce their batteries at less cost than others they will also be able to sell their cars cheaper and grow faster than any other company. Their business philosophy is clearly to be profitable through mass production at small margins.

What is in it for BYD? They got recognized as a quality business by Berkshire Hathaway who is the most recognized investment company on the planet. Everybody knows Berkshire knows how to do a proper due diligence before they invest. Now it should be easier for BYD to do business beyond China, in particular, to sell cars in Europe, Japan and USA. It is very convincing to say Buffet is behind us, we can be trusted as a reliable and serious business partner.

I do not know the details but it appears to work out well for both although it looks like this deal is most beneficial for Berkshire. However, one bad thing about buying into a Chinese company is that this country is not quite safe with regard to the protection of property rights. This is the biggest risk IMO.

@Henrik:

Agree with you that W. Buffet has made one more excellent (may even be his best) investment.

BYD may become one of the most successful and largest integrated partial and full e-vehicles in the world within a few years. The local market is by far the largest and most promising. Export opportunities are also almost countless and will certainly be very competitive.

Would be surprised to $20K BYD PHEVs and BEVs in North America within 2 to 3 years.

How long will it be til Berkshire and subs takes 51%?

@anonymus
Never.
Chinese law doesn't allow any foreign entity to own more than 50% of a Chinese company.

I'd feel safer putting my money in China.

Less likeely to cheat you than the lying piranhas in US banks.

"..225 million shares, representing approximately a 10% interest..."

BYD has about 2.25 Billion shares outstanding? That sounds like a lot. They have a 600,000 square meter battery factory (almost 6 million square feet) and even the Japanese were impressed when they toured it.

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