Categories
Insurance Minority Stock Positions

Berkshire Gains Big from Life Insurance Merger

(BRK.A), (BRK.B)

In a consolidation in the insurance industry, Berkshire Hathaway’s minority position in Symetra Financial Corporation will be bought out as the insurance company merges with Sumitomo Life Insurance Company.

A Big Win for Berkshire

The merger will give Berkshire a 32% boost on its Symetra stake, as it receives an all cash offer for its shares. The tender offer will give Berkshire a windfall worth $144 million.

Berkshire and other Symetra shareholders will receive $32.00 per share in cash at closing, plus a previously announced special dividend of $0.50 per share in cash, which is payable on August 28, 2015 to Symetra shareholders of record as of August 10, 2015.

The total combined transaction consideration of $32.50 per share is approximately $3.8 billion in aggregate and represents a 32% premium over Symetra’s average stock price of $24.64 for the 30 days ending August 5, 2015.

Berkshire Hathaway currently owns 17% of Symetra and has agreed to vote in favor of the transaction.

White Mountains Insurance Group, Ltd., which owns 18% of Symetra, has also granted its approval for the merger.

Best Wishes, Warren

Warren Buffett in a statement said, “Tom and his management team have done a good job running the company and have executed a great deal for shareholders. I wish them the best for future success under their new owners.”

Founded in 1907, Sumitomo Life provides traditional mortality life insurance, nursing care, medical care and retirement plans through sales representatives, insurance outlets, the Internet and bancassurance. As of March 31, 2015, Sumitomo Life had $229 billion in assets, approximately 6.8 million customers and 42,000 employees.

Symetra was founded in 1957 and is based in Bellevue, Washington. The company provides employee benefits, annuities and life insurance through a national network of benefits consultants, financial institutions and independent agents and advisors. As of June 30, 2015, Symetra had $34 billion in assets, approximately 1.7 million customers, and 1,400 employees nationwide.

Symetra will become Sumitomo Life’s platform in the U.S., where Sumitomo Life does not currently have a material operational presence. Symetra’s President and Chief Executive Officer, Thomas M. Marra, and the current management team will continue to lead the business from Symetra’s headquarters in Bellevue. Symetra will maintain its current brand, employees, distribution channels and product mix.

© 2015 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.

Categories
Acquisitions Precision Castparts Todd Combs and Ted Weschler Warren Buffett

A Big Win for Todd Combs

(BRK.A), (BRK.B)

While Warren Buffett gets all the attention for pulling the trigger on Berkshire Hathaway’s biggest deal to date, the $37 billion acquisition of Precision Castparts Corp. It was Todd Combs that first brought the company to Buffett’s attention. Combs took his first position in Precision Castparts three years ago, and at the time of the announcement of Berkshire’s takeover, the stake had grown to 3% of the company.

That the biggest acquisition in Berkshire’s history comes because one of his portfolio managers clearly pleases Buffett. “You have to give Todd Combs credit for the deal,” Buffett said on Monday, noting that he had never heard of the company before Combs brought it to his attention. ”Todd told me a lot about it, and over the last few years I have become familiar with it,” he added.

It wasn’t until Precision Castparts’ CEO and Chairman Mark Donegan visited Berkshire, when he was making the rounds visiting some of the large shareholders, that Buffett got interested in making a bid for the leading aerospace manufacturer.

The Dynamic Duo

Five years ago, Buffett hired stock-pickers Todd Combs and Ted Weschler, entrusting each one with a billion dollar portfolio. He placed no restrictions on what they could buy, and he has purposely stayed away from back seat driving. As Buffett’s confidence has grown in the two portfolio managers, he has increased the size of each of their portfolios, which now sit at around $9 billion.

Todd Combs, a Columbia Business School graduate and the former head of the hedge-fund Castle Point Capital, was hired by Buffett in October of 2010. He made a name for himself when Castle Point had an annual return of 34%.

Ted Weschler, who came on board at Berkshire in September of 2011, is a graduate of the Wharton School, and was a partner in Peninsula Capital Advisors, LLC.

A Path Forward for Berkshire

Clearly, whoever assumes the reins at Berkshire post-Buffett now has excellent managers to handle its $100 billion-plus stock portfolio, which includes such blue chip stocks as Coca-Cola, America Express, and Wells Fargo. And, since the biggest job that Berkshire’s CEO has on his plate is capital allocation, both Combs and Weschler also offer another way for the next CEO to identify worthy companies to add to the conglomerate.

The latest one, Precision Castparts, is a big win for Todd Combs, and a big win for Berkshire.

© 2015 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.

Categories
Dairy Queen

Kuwait the 27th country outside the U.S. & Canada for Dairy Queen

(BRK.A), (BRK.B)

With temperatures recently reaching 122 degrees Fahrenheit in Salmiya, Kuwait, could there be a better time to open a Dairy Queen?

Berkshire Hathaway’s wholly-owned Dairy Queen® system has opened its first DQ Grill & Chill® restaurant in Kuwait in the Marina Mall in Salmiya.

Kuwait is the 27th country outside the U.S. and Canada with a DQ® presence.

Middle East expansion has been at the top of Dairy Queen’s list over the last couple of years. Its list of countries already includes locations in Bahrain, Brunei, Egypt, Kuwait, Oman, Qatar, Saudi Arabia, and the UAE, with Jordan in the works.

A Focus on Emerging Markets

“Our strategy is to open franchises in emerging markets,” Dairy Queen’s President and CEO John Gainor said.

In April, Dairy Queen signed an agreement with SKM Franchise Co. LTD to open a minimum of 10 DQ locations in Jordan within five years.

“We believe there is an incredible growth opportunity in this region,” said Gainor. “The partnership with Durra Khaled for Foodstuffs Co. has allowed us to successfully re-launch our brand in Kuwait. Their wealth of business experience and diverse portfolio across the Middle East is a huge asset to the Dairy Queen system as we continue to invest and build on our global brand equity.”

Durra Khaled for Foodstuffs Co., a subsidiary of KMGC, has signed a long-term franchise agreement with the Dairy Queen system and plans to develop more than 20 DQ Grill & Chill restaurants and DQ Treat stores throughout Kuwait over the next five years.

The new restaurant features the full DQ Grill & Chill menu including the fan favorite, FlameThrower® GrillBurger™, chicken strip baskets, sandwiches and salads. The menu will also include the world famous DQ signature treats and beverages, such as the iconic Blizzard® Treat, soft-serve cones with the curl on top, sundaes and DQ Cakes.

The opening of the DQ Grill & Chill restaurant in Kuwait comes on the heels of the DQ brand’s recent store opening in the United Arab Emirates earlier this summer.

The DQ system has more than 6,500 locations, 1,457 of which are outside the U.S. and Canada.

For more information, read a Mazor’sEdge special report on Dairy Queen.

© 2015 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.

Categories
Acquisitions Precision Castparts

Why Precision Castparts is a Great Fit for Berkshire

(BRK.A), (BRK.B)

Fresh off his purchase of Kraft in conjunction with 3 G Capital, Warren Buffett looks to have an even bigger target in the sight of his famed “elephant gun.”

News that Berkshire Hathaway is acquiring aerospace manufacturer Precision Castparts Corp. (PCP) for roughly $37 billion highlight’s Berkshire’s continued pursuit of companies with durable advantages that create a wide moat. While manufacturing for aerospace doesn’t have the same moat as a regulated utility or a railroad, it still has a huge barriers to entry due to the high cost of manufacturing specialized parts, and the unlikelihood that a customer will switch suppliers once a plane begins its production run. In short, it’s just the sort of company Warren Buffett loves.

What Buffett also must love just as much is Precision Castparts’ annual growth rate of 23% over the past ten years.

The deal will be Berkshire’s biggest ever, topping its $26 billion purchase of BNSF Railway in 2009.

Berkshire already owns 3% of the Portland, Oregon-based company.

About the Company

Precision Castparts manufactures structural investment castings, forged components, and airfoil castings for aircraft engines and industrial gas turbines. It is a world-leading producer of complex forgings and high-performance alloys for aerospace, power generation, and general industrial applications, and its customers include Airbus, Boeing, GE, and Rolls-Royce, among others.

With annual revenues of approximately $10 billion, the company reported $2.412 billion of revenue in the second quarter of 2015. Of that revenue, 72% came from aerospace, 15 % came from power, and 13% came from general industrial and other sales. Operating margins in the last quarter were a healthy 25.7%. The company has a 15% return-on-equity.

The company has 29,350 employees at 157 manufacturing plants.

Management in Place

Unlike both Heinz and Kraft, where 3G Capital took on the duties of replacing senior management, Berkshire is likely to leave Precision Castparts’ management in place. After all, traditionally that has been one of Berkshire’s acquisition criteria, stating “Management in place (we can’t supply it).”

In the case Precision Castparts, the company has a strong leader in CEO Mark Donegan, who during his thirteen years at the helm has led the company to an 11-fold return. Among his strengths, Donegan has a keen eye for the type of “bolt-on” acquisitions that Buffett likes.

Why It’s a Great Buy for Berkshire

With the Great Recession now in the rear view mirror, airlines are placing large orders to replace aging fleets. Those orders, which are primarily to Airbus and Boeing, benefit Precision Castparts, as it supplies key components to both the A320neo and 737 MAX.

Doubling the Market

While Precision Castparts manufactures everything high-pressure blades for power generators to medical prosthetics, it is complex metal components for the aerospace industry that not only brings in the majority of its revenues, but also offers solid opportunities for growth.

As large as the commercial market for jets already is, it is expected to double by 2030 due to strong demand from India and China. By 2030, the Asia-Pacific market is expected to grow to 30% of all world-wide passenger mileage.

Boeing predicts that 38,050 new aircraft with a total value of $5.6 trillion will be needed in the next two decades. Roughly 10,500 commercial jets are needed just to replace fleets of old, fuel-guzzling aircraft that are aging out of service.

Locking in a Customer

With the needs of the aerospace market highly specialized, whether its engine turbine blades, or the large wing ribs for the Airbus’s giant A380, there is very little company switching among airplane manufacturers. Witness its relationships with both engine makers Pratt & Whitney and GE that go back over 45 years. Berkshire is assured of solid growth in an industry that is highly technical, needs manufacturing on a mammoth scale, and has high cost barriers to entry for potential competitors.

© 2015 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.

Categories
Berkshire Hathaway Energy

NV Energy Reaches $4.3 million settlement over Coal-Fired Generating Station

(BRK.A), (BRK.B)

NV Energy, a subsidiary of Berkshire Hathaway Energy, has reached a settlement in regards to the Reid Gardner Generating Station, which is located near Moapa, Nevada.

The $4.3 million settlement comes as NV Energy is working to close the plant as the result of a 2013 vote by the Nevada Assembly to shut down the plant, which was one of the nation’s dirtiest.

Three of the plant’s 100-megawatt generating units have already been decommissioned, and the remaining 257-megawatt generating unit is scheduled to cease operation in 2017.

Settlement to Bring Health and Wellness Benefits

$1.5 million of the settlement, which is the result of a lawsuit filed by the Moapa Band of Paiutes and the Sierra Club, will go to provide a community health wellness center on the Moapa Band of Paiute Indians reservation.

The remaining $2.7 million of the settlement will be used to monitor air quality and purchase water rights.

The settlement will be paid by NV Energy and NV Energy and the California Department of Water Resources.

The Moapa Band of Paiutes has long complained of respiratory problems related to coal ash. They have been supported in their efforts to close the plant by Nevada senator Harry Reid.

Senator Reid welcomed news of the settlement.

“For years the band has suffered the consequences of breathing dangerous dirty air from the Reid-Gardner coal plant and this settlement is a step forward. While the settlement will provide relief and help make the tribe’s home healthier and safer, no amount of money can pay for the sickness caused by a half-century of pollution from the coal plant. The Moapa Band of Paiutes and all Nevadans deserve a clean, healthy environment to raise their families in and pass on to their children.”

A Dwindling Number of Coal-Fired Plants

Most of Nevada Energy’s power comes from cleaner-burning natural gas generating stations, however the company still produces power from the 255 megawatt coal-fired Navajo Generating Station in Page, Arizona, and the 522 megawatt coal-fired North Valmy Generating Station in Valmy, Nevada. Both plants are partially owned by NV Energy.

On July 28, 2014, the EPA finalized a plan to cut pollution from the Navajo Generating Station in order to reduce the haze around nearby national parks and wilderness areas.

Berkshire Moves Toward Renewable Energy

Berkshire Hathaway Energy has already invested more than $15 billion in renewable energy generation projects that are under construction and in operation through 2014, and has pledged to invest up to an additional $15 billion going forward.

© 2015 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.

Categories
GEICO Insurance

GEICO Expands Availability of Ridesharing Coverage to Pennsylvania drivers

(BRK.A), (BRK.B)

Recognizing the growing popularity of ridesharing, which has seen Uber go from zero revenue in 2009 to over $10 billion today, and the proliferation of a host of competitors, including Lyft, Sidecar, and Carma, automobile insurer GEICO is continuing to expand the availability of its ridesharing insurance coverage.

Real-time ridesharing that uses an automated system to match drivers and riders has in a few short years moved from a fringe mode of transportation to a powerful alternative that has taxi and car services up in arms. Along the way, it has required new forms of liability coverage that are different than those offered to both personal and commercial drives.

GEICO first entered the market in February in Virginia, and has been selling a ridesharing product in Georgia, Virginia, Maryland and Texas, and is now expanding its ridesharing offering to drivers in Pennsylvania.

Replaces the Personal Auto Policy

GEICO’s ridesharing product replaces the driver’s personal auto policy and provides coverage both for personal and ridesharing use.

The coverage is billed as a Hybrid Policy that regardless of whether the driver is driving for personal needs, or is picking up a paid rider, provides coverage for liability, property damage, bodily injury, first party coverage, collision coverage, comprehensive physical damage coverage, and medical payments.

New and existing drivers that have been approved to drive for Uber (UberX and UberXL), Lyft, Sidecar and other services in Pennsylvania can now get the insurance coverage.

“With the rapid growth of ridesharing and Transportation Network Companies in Pennsylvania, we are excited to introduce a product that is specifically designed to meet the needs of ridesharing consumers,” said Nancy Pierce, GEICO regional vice president. “Our product offers customers a complete insurance solution at an affordable price along with the outstanding customer service they can expect from GEICO.”

“Rideshare drivers have unique insurance needs that go well beyond a traditional auto insurance policy,” said Othello Powell, director of GEICO commercial lines. “We created this product as a low-cost solution that covers both personal and ridesharing use and other on-demand services.”

GEICO says it will offer the coverage through GEICO Commercial at a price significantly lower than taxi and commercial rates.

© 2015 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.

Categories
Berkshire Hathaway Specialty Insurance

BHSI Begins Underwriting Marine Insurance in Australia and New Zealand

(BRK.A), (BRK.B)

As Berkshire Hathaway Specialty Insurance Company (BHSI) continues to expand in Australia and New Zealand, the company has announced that it has begun underwriting Marine Insurance in both countries.

The addition of marine coverage further rounds out BHSI’s offerings in Australasia. The company recently launched property, casualty, executive & professional and healthcare lines in Australia, as well as property, casualty and financial lines in New Zealand.

BHSI appointed Dimitry Zilberud as Head of Marine, and Mark Dixon as Marine Manager.

Through its local offices in Auckland, Sydney and Melbourne, BHSI now offers Marine Cargo (Ocean and Inland), Cargo Stock Throughput (STP), Carrier Goods in Transit, Carriers Liability, and Marine Project Cargo coverage.

“We are taking a flexible approach to marine risks, and are pleased to have Dimitry and Mark aboard to provide tailored solutions for customers and brokers navigating these exposures,” said Chris Colahan, President, Australasia Region, BHSI.

Dimitry Zilberud has nearly two decades of marine underwriting experience. Dimitry was most recently the Marine Underwriting Manager, Australasia at HDI-Gerling. Before that, he served as Marine Underwriting Manager, NSW/QLD, for ACE Insurance and was the Business Development Manager at WE COX London UK.

Mark Dixon was most recently Northern Region Marine Underwriting Manager and Senior Marine Underwriter, at HDI-Gerling. Mark has also held various Marine and Distribution positions for both Brokers and Insurers, and a graduate of the Royal Australian Naval College (RANC).

Zilberud and Dixon are both based in BHSI’s office in Sydney.

© 2015 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.

Categories
Marmon Group Special Report

Special Report: Breakthrough Aims to Change the Way You Drink Milk

(BRK.A), (BRK.B)

Go into any quick service restaurant and you will find machines dispensing soda and noncarbonated beverages, such as lemonade or fruit punch, but don’t expect them to be dispensing milk. The problem is that milk ships in bulky cartons, must be kept refrigerated, and has a limited shelf-life. It’s a problem that has vexed dairy producers and retailers alike.

That’s All About to Change

Cornelius, Inc. and Dairyvative Technologies, a Wisconsin-based developer of a patented process that allows pasteurized milk to be concentrated to a liquid that has one seventh of its original volume, are looking to change the way milk is shipped, stored, and dispensed.

Cornelius has signed a strategic partnership agreement with Dairyvative that makes Cornelius the exclusive provider of equipment to hold and dispense the concentrated milk provided by dairies using Dairyvative’s patented SEVENx technology.

One of the newest members of the Berkshire Hathaway family, Cornelius was acquired for $1.1 billion on January 2, 2014, by Berkshire’s wholly owned Marmon Group.

With 4,500 employees, and manufacturing facilities in seven countries, spanning North America, Europe, and China, Cornelius provides beverage dispensing technology to leading food service and retail companies, including PepsiCo, Coca Cola, McDonald’s, Yum, Starbucks, and Burger King.

All of these companies and more are potential customers for Dairyvative’s new technology.

A Whole New Way to Store Milk

Dairyvative claims its SEVENx technology “allows pasteurized milk to be concentrated to a liquid that has one seventh of its original volume. The lactose-free end product is shelf-stable without refrigeration for up to 6 months. The process also keeps milk proteins intact, maintaining nutrient and flavor profiles.”

Unlike milk treated with Ultra-high temperature processing (UHT), SEVENx technology has relatively minimal thermal treatment by comparison.

“I have been working on this process for 28 years,” said Dr. Charles E. Sizer, founder and CEO of Dairyvative Technologies. “There have been a lot of hurdles in maintaining the functionality and freshness of the product.”

One of the first markets for the SEVENx technology will be in quick service restaurants, where using Cornelius’s dispensing technology, the new dispenser will allow individual consumers the choice of adding several different flavors to the milk. Cornelius’ technology also enables the milk to be carbonated during dispensing.

Looking for a World Leader

“We knew Cornelius is the leader in dispensing products, so we approached them and signed an exclusive deal,” Dr. Sizer explained.

While Dairyvative touts the concentrated milk as having the “natural fresh taste of milk,” it does note that it is slightly sweeter due to the conversion of lactose into the sugars glucose and galactose.

Dairyvative also says that the cost for dairy processors to produce the concentrated milk is low, as much of the equipment that processors need they already have in place. They also note that the long shelf-life means less spoilage and returns, lower transportation costs, and environmental benefits such as less electricity needed for milk storage.

Reducing the Carbon Footprint

Reducing the carbon footprint is very important to Dr. Sizer. He notes that currently it takes 2.05 kilos of carbon to bring 1 kilo (1 liter) of milk to the consumer.

“We can reduce that by 20%-30% right out of the gate,” Dr. Sizer said. “And by locating in close proximity to the dairy, we can reduce it even further.”

Expect to see the U.S. rollout of the new milk product in 2016, and Dairyvative is already in discussion with multi-national dairies for international markets.

© 2015 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.

Categories
Kraft Heinz Minority Stock Positions

Kraft Experiences 3G’s Heinz Hatchet

(BRK.A), (BRK.B)

Now that Kraft is part of Kraft Heinz, the aggressive cost cutting that 3G Capital brought to Heinz has come to Kraft as well. Gone are the days of a host of perks, including a free supply of Kraft snack foods for employees, or even minifridges in the office.

It’s no surprise, as 3G is known for imposing cost controls big and small that include cuts to travel expenses, limits on the number of printer copies that can be made each month, the elimination of snacks in break rooms, and new mandates on cutting electricity usage.

The same goes for personnel, and 3G has already begun trimming and replacing employees, including the departure of Kraft’s Chief Financial Officer James Kehoe.

What Do Warren and Charlie Think?

While 3G’s ruthless cost-cutting has dismayed some Berkshire shareholders, it has not offended either Warren Buffett or Charlie Munger, who see it as necessary to keep complacent, century-old companies competitive in the modern world. After all, layoffs were in Berkshire Hathaway from the start, as Buffett fought to keep the failing textile company afloat.

At the 2015 Berkshire Hathaway annual meeting both Warren Buffett and Charlie Munger strongly supported 3G’s strategy.

“3G has been buying businesses that have too many people,” Buffett explained. “You will have never found a statement from Charlie or me saying that a business should have more people than needed,” Buffett added.

The cost cutting has also pleased Wall Street, as shares of Kraft Heinz (KHC) are already up roughly 9% since their trading debut on July 7.

Berkshire’s move to partner with 3G, which combined own 51% of Kraft Heinz, with Berkshire the largest single shareholder at 26%, has been a very profitable way for Berkshire to put its mountain of cash to use. Andrew Bary of Barron’s calculated that Berkshire’s $9.25 billion investment in Heinz and Kraft are now worth $16 billion. He called it “a stunning profit in just two years.”

With 3G also having turned to Berkshire for cash to finance its Burger King takeover of Tim Hortons, a move that has gave Berkshire 8% of the combined company, it looks like Buffett’s and Munger’s interest in 3G’s management style is growing not waning.

© 2015 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.

Categories
Minority Stock Positions

BYD a Willing Partner

(BRK.A), (BRK.B)

Berkshire Hathaway’s roughly 10% ownership in BYD Company Limited, the Chinese automobile and new energy company that is the largest supplier of rechargeable batteries in the world, makes the company especially worth watching for Berkshire shareholders.

In 2008, Berkshire Hathaway placed a major bet on BYD’s potential when it purchased 225 million shares, and the company has not disappointed as it has aggressively moved into new markets.

A Willing Partner

While Tesla has mostly gone it alone, BYD not only manufactures its own line of cars and buses, but it is willing to form manufacturing partnerships that give it entry into new markets.

The key is BYD’s electric vehicle technology that makes it an excellent partner for other manufacturers looking to meet ambitious climate change and pollution goals.

On July 27, 2015, BYD announced a joint project worth $29.6 million deal with British bus manufacturer Alexander Dennis Limited to build 51 single-deck zero-emission buses for London. The buses will utilize BYD’s chassis and electric drivetrain with the bodies supplied by ADL. The partnership helps London move towards its goal of having all single-deck buses totally emission-free by 2020.

“This combination will deliver a unique vehicle which we believe will have a strong appeal in London and elsewhere in the UK,” said Isbrand Ho, the managing director of BYD Europe.

The buses will run on two routes served by London bus operator Go-Ahead London, and are scheduled to be in service by August 2016.

“Working together with our partners and friends at ADL we can provide a truly optimized blend of expertise. Our deep experience of not only battery technology but the critical battery management systems and driveline components necessary to deliver unequaled range and reliability are matched to ADL’s strong track record in building low weight, attractive and durable buses,” Ho said.

“We are delighted to have placed this order with BYD and have every confidence that along with ADL. They will deliver the world’s most advanced, zero-emission, pure electric bus fleet, and one that will match the rigorous demands of the London operating environment. This is a considerable step towards a cleaner, greener London bus fleet,” noted Richard Harrington, engineering director of Go-Ahead London.

For More on BYD, read the Special Report: BYD, Berkshire’s Tesla.

© 2015 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.