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Samsung Joins Berkshire as BYD Minority Owners

(BRK.A), (BRK.B)

Korean multinational electronics company Samsung Electronics Co., Ltd. has purchased a $449 million (3 billion yuan) stake in Chinese auto and battery manufacturer BYD Co. Ltd.

The move comes after Samsung was not included in a list of foreign battery manufacturers approved by China.

In taking the minority position, Samsung joins Berkshire Hathaway, which owns 9.1% of BYD.

According to Bloomberg, Samsung purchased 52.3 million BYD shares at 57.4 yuan apiece in a private placement, and the purchase will decrease BYD Chairman Wang Chuanfu’s ownership roughly 1.9% to 18.8%.

Berkshire’s stake in BYD has worked out well, as it has seen the value of its investment skyrocket as BYD has become a world leader in a wide variety of areas.

What are those areas?

BYD is number one globally in EV vehicles. The company vaulted to the number one spot in 2015 from only being number ranked seventh a year earlier.

BYD is the number one maker of rechargeable batteries, and like Tesla even has rechargeable battery home storage already on the market.

BYD is number one in pure electric buses that come in a variety of sizes. From commuter buses to buses for long distance travel, BYD has been quietly conquering the world, and frankly right now has no major competitors. In April 2016, BYD achieved a major milestone with the production of its 10,000th pure electric bus.

BYD’s also rapidly growing a host of other products that include LED lighting, photovoltaic panels for solar farms, and other electric vehicles such as forklifts.

As for solar panels, in the U.S., BYD’s already has a solar farm with a total of 109MW using its 270,000 PV modules being developed in California. It also has other projects using its modules, including a 65MW plant in Utah, and a 28MW plant in Arizona.

Perhaps you haven’t heard of BYD, but they are no fly-by-night company. BYD has nearly 180,000 employees working in 22 industrial parks across the globe.

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 is now worth roughly $1.77 billion.

No telling how much Samsung’s shares will appreciate, but they obviously want in on a company that is quickly becoming leading company in both the IT industry and automobile industry.

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

© 2016 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.