Warren Buffett’s Berkshire Hathaway Inc. completed the purchase of a 9.89 percent stake in electric- car maker BYD Co., whose shares have jumped fivefold since the deal was announced.
The China Securities Regulatory Commission approved the purchase, Hong Kong-listed BYD told the stock exchange today.
Berkshire is set to make a paper profit of about $1 billion from the deal, agreed in September, following the increase in BYD’s share price. The automaker has climbed in Hong Kong trading on publicity from the Buffett tie-up and because of rising demand for its fuel-efficient vehicles.
“Investors are buoyed by the potential growth in BYD’s electric-car business,” said Barry Leung, an analyst at Sun Hung Kai Securities Ltd. in Hong Kong. “The alternative-energy sector is clearly one that will continue to enjoy the support of the Chinese government.” Leung rates the carmaker “buy.”
Berkshire’s MidAmerican Energy Holdings Co. unit agreed to buy 225 million new shares of BYD for HK$8 apiece. That stock now has a market value of HK$9.4 billion ($1.2 billion), based on today’s closing price. Buffett will pay HK$1.8 billion.
BYD, also China’s biggest maker of rechargeable batteries, fell 1.3 percent to close at HK$41.65 in Hong Kong trading today, before the completion of the purchase was announced....MORE
Thursday, July 30, 2009
Berkshire Takes 9.9% Stake in China Electric-car Maker BYD (BRK.A; 1211 [Hong Kong])