(Reuters) - Warren Buffett's Berkshire Hathaway Inc said it would buy Procter & Gamble Co's Duracell battery business in exchange for its $4.7 billion stake in the world's No. 1 household products maker.
P&G, in the midst of selling about half of its slow-growing brands, said it would pump in about $1.8 billion in cash into Duracell before the transaction.
"It is a good thing that P&G is moving swiftly to divest its non-core brands," Sanford Bernstein analyst Ali Dibadj said. "However, I don't take it as a good sign that Buffett would rather own Duracell than P&G."
Shares of P&G, which also reiterated its full-year 2015 organic sales and core earnings forecasts, fell about 1 percent in early trading.
"I have always been impressed by Duracell, as a consumer and as a long-term investor in P&G and Gillette," Berkshire Hathaway Chief Executive Buffett said in a statement.
"This is our kind of business... Not very exciting but a good, solid business," Buffett told FOX Business Network.
Buffett became a P&G shareholder in 2005 when the company, bought Gillette, Duracell's owner at the time. Buffett was Gillette's largest shareholder, owning its shares for over a decade, and once sat on its board.
P&G, whose brands include Pampers diapers and Tide detergent, said on Thursday the deal would be tax efficient for the company and maximizes Duracell's after-tax value.
The company said in August it would focus on faster-growing businesses by selling slow-growing brands. P&G said last month it wanted to split off Duracell.
Demand for Duracell's mainstay non-rechargeable alkaline batteries has waned as electronic devices has increased demand for re-chargeable batteries.
Berkshire owned about 52.8 million P&G shares as of June 30, or a stake of about 1.9 percent worth $4.7 billion as of P&G's Wednesday close. (http://1.usa.gov/1lZ2Ca3)
P&G said it would take a non-cash charge of about 28 cents per share in the current-quarter and expects to close the deal in the second half of next year.
Goldman Sachs & Co is P&G's financial adviser and Jones Day acted is its legal adviser.
(Reporting by Devika Krishna Kumar and Yashaswini Swamynathan in Bangalore; Editing by Savio D'Souza)
