Monthly Archives: September 2020

Special Report: Shares Of Berkshire Hathaway-Backed BYD Soar On News Of Luxury Car Orders

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Shares of Berkshire Hathaway-backed Chinese battery and vehicle manufacturer BYD Co., Ltd. jumped 14.58% on Wednesday, as the company racked up 40,000 orders in the first two months in China for its new plug-in electric Han luxury car.

BYD’s stock (BYDDF), which had been as low as $4.35 on March 23, closed at $16.22 on Wednesday.

The Han EV will be sold in China at first. Its extended-range version will sell at 229,800 RMB (approximately $32,800), the extended-range variant of the premium model will be priced at 255,800 RMB (about $36,500), and the 4WD high-performance version will sell at 279,500 (about $40,000) RMB. Besides, the PHEV version, Han DM, will sell at 219,800 yuan (about $31,400).

The Han is the first mass-produced model that uses BYD’s ultra-safe Blade Battery, and its performance stats are impressive.

Han EV’s long-range pure electric version has a single-charge range of 605 kilometers (376 miles) based on the NEDC test cycle.

The four-wheel-drive high-performance version possesses an acceleration of 0 to 100km/h (approximately 62 mph) in just 3.9 seconds, making it China’s fastest EV in production, and the DM (Dual Mode) plug-in hybrid model offers 0 to 100km/h in 4.7 seconds, making it the country’s fastest hybrid sedan.

The Han series comes with the world-first MOSFET motor control module, which fuels the car’s record-breaking 3.9 second 0-100km/h acceleration, and the Han’s braking distance requires only 32.8 meters from 100km/h to a standstill.

The Han EV’s extended-range version’s 605-kilometer cruising range also gives it the world’s highest energy recovery rating. The Han DM hybrid model comes with 81 kilometers of pure-electric cruising range and over 800 kilometers of integrated range, along with five different power modes.

The company claims that its ultra-safe Blade Battery makes it twice as safe compared to EVs using traditional ternary lithium battery packs. The Han’s DM is powered by a “seven-dimensional quad-layer” safety matrix that remain stable at high temperatures.

Mr. Wang Chuanfu, President of BYD Co., Ltd., said, “The Han has taken ten years from the concept stage to formal mass production,” which he likened to “ten years of sharpening a brilliant sword”. He added, “Through our leading technologies, we have created three benchmarks for flagship EVs in terms of safety, performance, and luxury.”

The Han comes with the latest version of BYD’s DiPilot intelligent driving assistance system, including a wide array of safety features like an adaptive stop-and-go cruise-control system (ACC-S&G), a forward-collision warning system (FCW), a pedestrian identification and protection system, a lane departure warning system (LDWS), traffic sign identification, and much more. The Han can be upgraded with even higher-level functions including BYD’s ICC Intelligent Navigation System, the ICA Integrated Adaptive Cruise System, and the TJA Traffic Congestion Assistance System. In addition, the extended-range premium and 4WD high-performance models provide blind spot monitoring, lane-change assistance, rear collision early warning and other leading functions, which can be upgraded to a comprehensive automatic parking function.

DiPilot also comes with the DiTrainer mode, which selectively turns on assisted driving based on factors such as driving behavior, road conditions, weather, and even driving age. The DiLink 3.0 Smart Network system comes with smart voice upgrades and a DiUI upgrade, with a 15.6-inch Ultra HD 8-core adaptive rotary suspension PAD, bringing the even smarter luxury sedan.

As for styling, BYD’s new Dragon Face design language uses both Eastern and Western design aesthetics. From its striking front grille, its Dragon Claw tail lights and other features, the car’s stylized design creates a striking, confident vehicle that defines a new era for Chinese-made luxury vehicles. The interior is equipped with solid wooden panels, high-quality Napa leather seats, aluminum trims and other high-end materials rarely used in other high-end luxury vehicles.

A Profitable EV Company

BYD recently reported a net profit of 1.66 billion yuan (roughly 242 million U.S. dollars) for the first half of 2020. The net profit rose 14.29 percent over the same period in 2019.

Through June 30, BYD had revenue of 60.5 billion yuan, down 2.7 percent year on year, according to BYD’s financial report filed with the Shenzhen Stock Exchange.

Despite the global pandemic, BYD projects 2.8 billion yuan to 3 billion yuan of net profit in the first three quarters of this year, which would be an increase of 77.86 percent to 90.56 percent from the same period of 2019.

BYD and Berkshire Hathaway

In 2008, Berkshire Hathaway bet on BYD’s potential, purchasing 225 million shares. It’s an investment that has paid off handsomely. Berkshire’s original investment of $230 million has grown in value sixteen-fold.

© 2020 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway and BYD, and this article is not a recommendation on whether to buy or sell a stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Berkshire Hathaway HomeServices Québec Officially Opens Head Office in Montréal

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Berkshire Hathaway HomeServices Québec, which was introduced in May of this year, has opened its new head office in the Midtown district of Montréal.

The fully renovated 1,900-square-foot space situated at 5329 Ferrier Street is equipped with executive offices, closing rooms, a kitchen and a large boardroom with video conferencing. Furnished by reputed Montréal home decor specialists Ambienti Design and District A, this location will house the management team, as well as the current roster of 16 brokers with room to grow.

“We wanted a space where people feel at home in an up-and-coming area that is easily accessible with plenty of parking,” said Sacha Brosseau, the company’s founder and Chief Executive Officer. “During these challenging times, we have made sure to fully service our brokers from a distance. Now, our growing family has a place they can call home.”

Chris Stuart, CEO of Berkshire Hathaway HomeServices, said, “We want to join Sacha Brosseau in extending a warm welcome to the new headquarters of Berkshire Hathaway HomeServices Québec. Since Sacha joined our network earlier this year, we have eagerly anticipated his moves to establish the brand in Québec.”

Since its start of operations in June, Berkshire Hathaway HomeServices Québec has made a strong impression in the market with numerous sales in some of the most prominent areas in and outside of the city. With room to grow, Brosseau wishes to “take his time and select the right brokers, which will add to the culture of family.”

“My partners and I have been friends for many years, and have always counted on one another in good and bad times. This is the culture that we want for our organization. It’s not about what you bring in financially, it’s about what you can add to make the team better,” added Brosseau, who looks to expand in other areas of the province. “I don’t see us ever being over 100 brokers in the whole province. Our goal is to get the right real estate professionals in the right areas, which will offer the best service to their clients, just like the exceptional team of brokers we currently have.”

Gino Blefari, chairman of Berkshire Hathaway HomeServices, said, “Berkshire Hathaway HomeServices Québec is an excellent example of the Berkshire Hathaway HomeServices mission that is dedicated to continually improving the lives of our clients especially in such an unprecedented chapter in the history of the world. Their personalized response to the Covid-19 threat further embodies that Berkshire Hathaway HomeServices is a name that buyers and sellers can trust.”

© 2020 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway and BYD, and this article is not a recommendation on whether to buy or sell a stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Berkshire’s Intero Continues Expansion in California and Nevada

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Intero, a Berkshire Hathaway affiliate and wholly owned subsidiary of HomeServices of America, Inc., has acquired two Intero franchise locations in Gardnerville, NV and Markleeville, CA. The two locations currently house 26 agents and come with nearly 285 active listings.

Business partners and former franchise owners, Teddy Carlson-McKone and Dennis McDuffee, will transition to the roles of Vice President and Managing Officer of both locations.

“We’re thrilled to continue our growth and reach throughout California and Nevada,” said Brian Crane, Co-Founder and Chief Executive Officer of Intero – a Berkshire Hathaway affiliate. “The Carson Valley and Nevada represent a great opportunity for Intero. Teddy and Dennis and the company they have built represent the best of Intero and we’re proud to bring them on to the corporate team. We look forward to growing our presence in northern Nevada and the Greater Tahoe region with Teddy and Dennis leading the way.”

The attraction to these locations was based on the high-quality agents, their production level, and their stellar reputation within the region. The Gardnerville office has been voted by the public as the #1 Real Estate Office by the local newspaper, The Record Courier, in the annual “Best of Carson Valley” section. They have secured this honor for three years running. In addition, Dennis McDuffee was voted as the top commercial real estate agent for the annual awards.

“We couldn’t be happier with this next chapter in our Intero journey,” said Teddy Carlson-McKone, Vice President and Managing Officer of Intero Gardnerville and Markleeville. “We’ve been part of the Intero family for 10 wonderful years and now it gets even better with the support of the corporate team, HomeServices of America and Berkshire Hathaway.”

Intero, a Berkshire Hathaway affiliate and wholly owned subsidiary of HomeServices of America Inc., serves Northern California and Nevada with 22 offices throughout the greater Silicon Valley, San Francisco, Calaveras County, Western Nevada and the Greater Lake Tahoe Region. The Intero Franchise network is comprised of 55 affiliates located in Alabama, California, Nevada, Tennessee and Texas. The company is headquartered in the heart of California’s Silicon Valley.

© 2020 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell a stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Signature Flight Support, Neste and NetJets in Strategic Partnership to Accelerate the Adoption of Sustainable Aviation Fuel

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A pioneering collaboration combines Sustainable Aviation Fuel (SAF) production and distribution, establishing a permanent supply for private aviation operators at San Francisco and London-Luton.

Cognizant of the important and active role that private aviation plays in environmental responsibility, Signature Flight Support announces the introduction of Signature Renew, a company-wide global sustainability initiative to innovate and invigorate the journey toward net-zero carbon emissions. Central to the program is accelerating the use of SAF for private aircraft, with Signature initially establishing permanent supplies of low emission fuel at two key gateways – San Francisco Int’l Airport (SFO) in the United States and London-Luton Airport (LTN) in the United Kingdom.

Neste, a leading producer of renewable products and the world’s third most sustainable company according to Corporate Knights’ 2020 ranking, has agreed in principle to supply Signature Renew with Neste MY SustainableAviation Fuel™. Encompassing an expected five million gallons, the volume of SAF that Signature has committed to purchase from Neste is the largest agreement by a Fixed Base Operator to date. Furthermore, NetJets, the worldwide leader in private aviation, has announced its role as a launch customer for Signature Renew supplied SAF in San Francisco.

Neste MY Renewable Jet Fuel™, is a sustainable aviation fuel that in neat form and over the lifecycle reduces GHG emissions up to 80% compared to fossil jet fuel. The fuel provides an immediate solution for reducing the direct carbon emissions of flying.

The creation of the Signature Renew program aligns with the needs of many aircraft operators that are accountable to their parent organization’s corporate sustainability goals. SAF gallons purchased via Signature SFO will take advantage of the California Low Carbon Fuel Standard (LCFS) tax incentive program, while at London-Luton operators can reduce carbon offsetting needs for the EU ETS.

Prior to use, the SAF is blended with fossil jet fuel and is then verified to meet ASTM jet fuel specification. In its neat form and over the lifecycle, SAF can reduce greenhouse gas emissions by up to 80% compared to conventional jet fuel. Once blended at a 35% ratio, Signature anticipates more than a 25% reduction in direct net lifecycle greenhouse gas emissions from aircraft using the SFO and LTN SAF blends.

“Signature is undertaking a momentous step that enables the wide-scale adoption of SAF,” explained Tony Lefebvre, Chief Operating Officer for Signature. “Prior to establishing a permanent supply of SAF, FBOs have only been able to provide a few thousand gallons at one time – typically by request of an individual aircraft operator or for a one-off event. Signature is committing to having SAF available for uplift in San Francisco in the next few weeks, culminating in the world’s first 100 percent sustainably supplied FBO Q1 2021.” He continued, “By having the first FBO in the world that is able to offer operators a reliable, full volume supply of SAF at a competitive price only a few dollars beyond traditional Jet A, we are providing the critical acceleration that industry trade groups and aviation regulators have cited as a necessary step on the path to widespread adoption.”

Neste has been at the vanguard of sustainable aviation fuel production for nearly a decade, and the company will have the capacity to produce some 1.5 million tonnes (515 million gallons) of SAF annually by 2023. Neste’s SAF is made from sustainably sourced, renewable waste and residue materials – such as used cooking oil for example. It is a drop in fuel that offers an immediate way to reduce the direct greenhouse gas emissions from aircraft, requiring no new investments, modifications, or changes to procedures.

“Together, we are taking a big step forward in providing passengers with a way to reduce their own environmental handprint,” says Chris Cooper, Vice President, Renewable Aviation North America, Neste. “People who travel by private aircraft know there’s an environmental impact and many of them want a more sustainable option. In fact, a good number of people relying on private aviation are either working for companies with established climate goals or individuals who have personally committed to fighting climate change. This partnership means that passengers can look forward to being able to board a private aircraft fueled by SAF and help fight – not contribute – to climate change in the near future.”

Additionally, NetJets is the launch customer of sustainable fuel supplied by the Signature Renew program at SFO with a commitment to purchase up to 3m gallons of SAF, representing a large portion of Signature’s total volume at the airport. The non-exclusive agreement will support the continued expansion and availability of SAF throughout the business and general aviation industry. All of NetJets aircraft visiting the San Francisco Int’l Airport will be supplied with Neste-produced low-carbon fuel, uplifted by Signature.

“NetJets is pleased to be Signature’s first major SAF client,” said Brad Ferrell, NetJets Executive Vice President, Administrative Services. “We are thrilled to be the first private aviation company with a commitment to purchase sustainable fuel for all NetJets flights out of San Francisco International Airport (SFO) and Columbus International Airport (CMH). This first initiative helps to lay the groundwork for our sustainability program which aims to solidify our unwavering commitment to excellence.”

© 2020 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Johns Manville Building Polyiso Production Plant in Texas

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Berkshire Hathaway’s Johns Manville has begun construction of a new production plant in Hillsboro, Texas.

The plant, which is projected to be completed by mid-2022, will manufacture polyiso products including ENRGY 3® roof insulation, ProtectoR® HD high density cover board, AP® Foil Faced Foam sheathing and GoBoard® tile backer.

These products are preferred in the market due to their high R-value per inch and the strength and durability they offer.

“We continue to invest in our business, customers and communities,” said Joe Smith, President of Roofing Systems at Johns Manville. “Increasing the availability of our products while creating new jobs is a win-win.”

When complete, the Hillsboro plant will employ more than 50 people and include a JM roofing distribution center.

The warehouse will stock many JM products, including TPO and accessories to expand customer service. Hughes Commercial Real Estate and Development will develop the site and FA Peinado Construction will be the general contractor.

The groundbreaking in Hillsboro comes on the heels of a recent expansion of JM’s Milan, Ohio, roofing products plant. That expansion increased the facility’s production capacity and added approximately 50 jobs.

© 2020 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Berkshire Hathaway Specialty Insurance Appoints Team to Lead Entrance Into Executive & Professional Lines in France

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Berkshire Hathaway Specialty Insurance is entering the Executive & Professional Lines market in France and has appointed Olivier Hamon as Head of Financial Institutions and Management Liabilities and Alice Batchili as Professional Indemnity Manager.

Olivier and Alice will spearhead BHSI’s launch of a full range of products in France, including D&O Liability, Financial Institutions D&O Liability, Professional Indemnity, Employment Practices Liability, Crime, and Cyber Insurance, with an initial focus on Corporate and Upper Middle Market risks.

“Unencumbered by legacy liabilities, and committed to disciplined risk underwriting, BHSI is well positioned to provide companies across France with stable and sustainable Executive & Professional Lines solutions,” said François-Xavier d’Huart, Country Manager, France, BHSI. “Olivier and Alice bring to BHSI extensive experience and the excellent capabilities and character that are a hallmark of BHSI’s global team. We are pleased to have them building our Executive & Professional Lines portfolio and our team in France.”

Olivier has more than 12 years of insurance and financial industry experience, with a focus on Financial Lines for commercial and financial institutions in France. Earlier in his career he was a Financial Analyst at Coface Holding. He earned a bachelor’s degree in Economics, with Honors, from University of Paris, Panthéon-Sorbonne, and a master’s in Finance from University Paris Panthéon Assas.

Alice comes to BHSI with more than 15 years of industry experience, spanning both the insurance and brokerage sides of the business, and extensive expertise in both Professional Indemnity and Cyber Insurance. She holds a master’s degree in International Management of Insurance from Ecole Supérieure d’Assurance.
Both Olivier and Alice will be based in BHSI’s office in Paris.

© 2020 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Berkshire Hathaway-Backed Paytm Pulled From Google’s Play Store Over Gambling Policy Violation

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Google has pulled Berkshire Hathaway-backed Paytm from its Play Store, claiming the company has violated its gambling policies. Play Store prohibits online casinos and other unregulated gambling apps that enable sports betting in India.

Over the past decade, Paytm has become India’s leading digital payments platform in country where digital payments are projected to grow five-fold by 2023.

Suzanne Frey, Google’s Vice President, Product, Android Security and Privacy, said in a blog post that it doesn’t allow online casinos or support any unregulated gambling apps that facilitate sports betting.

“This includes if an app leads consumers to an external website that allows them to participate in paid tournaments to win real money or cash prizes, it is a violation of our policies,” said Frey in the blog post.

“We have these policies to protect users from potential harm. When an app violates these policies, we notify the developer of the violation and remove the app from Google Play until the developer brings the app into compliance. And in the case where there are repeated policy violations, we may take more serious action which may include terminating Google Play Developer accounts. Our policies are applied and enforced on all developers consistently,” Frey said.

In 2018, Berkshire Hathaway invested $356 million for a 3-4% stake in One97 Communications Ltd, the parent of Indian digital payments company Paytm. The investment was made by Berkshire Hathaway portfolio manager Todd Combs.

“I have been impressed by Paytm and am excited about being a part of its growth story, as it looks to transform payments and financial services in India,” Combs said at the time of the investment.

Combs sits on the eight-member board of the company, which at the time of the investment included Alibaba co-founder and executive chairman Joseph Tsai, Shardul Amarchand Mangaldas & Co managing partner Pallavi Shroff, Ant Financial CEO Eric Jing, and Goldman Sachs Asia chairman Mark Schwartz.

© 2020 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Berkshire Hathaway GUARD Launches Commercial Package Coverage in Illinois

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Berkshire Hathaway GUARD Insurance Companies recently announced it added Illinois to the list of states where the insurer offers its Commercial Package Policy.

The product includes Commercial Property featuring limits up to $120 million per location (higher limits considered), with an enhanced causes of loss form, including built-in equipment breakdown, crime coverages as well as broad inland marine coverages; General Liability with aggregate limits up to $6 million; and Commercial Umbrella for added protection.

“As we continue to expand our portfolio, our goal is to be the preferred insurance carrier our agents turn to for their insureds. We continue to supply our network of independent agents with quality products that enable them to grow,” said Sy Foguel, Berkshire Hathaway GUARD CEO. “Geared toward larger insureds, our CPP product complements our Businessowner’s Policy offering.”

Illinois is the fourth state where GUARD’s Commercial Package is available, after rollouts in Pennsylvania and New Jersey in 2019 and Michigan earlier this year. Availability in more states is expected soon.

“What sets our Commercial Package apart, among other things, is how we enhance our base coverages with a wide range of add-ons, limit options and access to both proprietary and industry specific endorsements,” says Lyle Hitt, Chief Insurance Officer of Property and Casualty Insurance. “We take a customized approach to expanding the limits and scope of traditional property and casualty insurance.”

Berkshire Hathaway GUARD’s Commercial Package product is designed to address the insurance needs of larger, more complex operations with multiple exposures. Initial target markets include light-to-medium manufacturing, wholesalers and distributors, large offices/habitational buildings, truck stops/travel plazas, resort hotels, and country clubs/golf courses.

Discounts are available when seeking quotes for two or more additional applicable lines, like Worker’s Compensation or Commercial Auto.

Berkshire Hathaway GUARD Insurance Companies is a property and casualty insurance specialist writing $2 billion in premium nationwide. GUARD offers a variety of products for both commercial and personal lines of insurance. Berkshire Hathaway GUARD Insurance Companies maintains a total of eight offices throughout the country.

© 2020 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

GEICO Making Hiring Push in Macon

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GEICO is adding to its robust workforce in Macon, Georgia, by adding 500 new associates by the end of the year.

There are immediate openings for Customer Service Representatives, Sales Representatives, Claims Service Representatives, Title Processing Specialists and Emergency Roadside Service Representatives with competitive salaries and GEICO’s Total Rewards benefits package, which includes health, dental and vision coverage, paid vacation and holidays, parental leave, continuing education and tuition reimbursement.

The Management Development Program is also seeking ambitious recent college graduates.

“There are more than 7,000 associates in our GEICO family here in Macon, and we are happy to see our family growing as we continue to go above and beyond to serve our customers,” Regional Vice President Frankie Silva said. “We are incredibly proud and fortunate to be able to offer career opportunities at a time when so many people are looking to get back on their feet.”

A member of the Berkshire Hathaway family of companies, GEICO is a stable company that was founded more than 80 years ago and has steadily risen to become the nation’s second-largest auto insurer. GEICO is a promote-from-within company that offers career growth, a supportive environment and many community engagement opportunities.

© 2020 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell a stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Kraft Heinz Sells Natural Cheese Business

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The Kraft Heinz Company is selling its Natural, Grated, Cultured and Specialty cheese businesses to a U.S. affiliate of Groupe Lactalis for a purchase price of $3.2 billion USD.

The proposed transaction is expected to close in the first half of 2021, subject to regulatory review and approval.

The transaction includes Kraft Heinz’s Natural, Grated, Cultured and Specialty cheese businesses in the U.S., Grated cheese business in Canada, and the entire International Cheese business outside these two countries, including the following brands: Breakstone’s, Knudsen, Polly-O, Athenos, Hoffman’s, Cracker Barrel in the U.S. only, and outside the U.S. and Canada only, Cheez Whiz.

In addition, Kraft Heinz will partner with Groupe Lactalis on a perpetual license for Kraft in Natural, Grated and International cheeses and Velveeta in Shredded and International cheeses.

Kraft Heinz will retain the Philadelphia Cream Cheese, Kraft Singles, Velveeta Processed Cheese and Cheez Whiz Processed Cheese businesses in the U.S. and Canada, the Kraft, Velveeta and Cracker Barrel Mac & Cheese businesses worldwide, and the Kraft Sauces business worldwide.

“We believe these cheese and dairy businesses will thrive in the hands of a global dairy company like Groupe Lactalis,” said Kraft Heinz CEO Miguel Patricio. “At the same time, the transaction will enable us to build sustainable competitive advantage in businesses where we have stronger brand equity, greater growth prospects and can use our manufacturing scale and consumer-based platforms approach. This is a great example of agile portfolio management at work.”

As outlined in the new Kraft Heinz operating model announced earlier today, platform roles will help guide resource allocation and investment decisions. Kraft Heinz will focus on growth areas and take strategic action where appropriate. This will help to accrete the Company’s growth profile, enhance strategic focus, and create shareholder value.

Under the terms of the agreement, Kraft Heinz will sell production facilities located in Tulare, Calif.; Walton, N.Y.; and Wausau, Wis., and a distribution center in Weyauwega, Wis. These facilities and their employees will continue to operate in ordinary course. Approximately 750 employees will be transferred from Kraft Heinz to Groupe Lactalis.

The cheese businesses being sold contributed approximately $1.8 billion USD to Kraft Heinz’s net sales for the twelve months ended June 27, 2020. The transaction valuation represents an approximate 12x multiple of LTM Adjusted EBITDA for the standalone business. Kraft Heinz expects to use post-tax transaction proceeds primarily to pay down debt.

© 2020 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or indiv