Duracell. KKR''s 1988 carve-out that became Berkshire''s 2016 acquisition
A 28-year arc from PE buyout to strategic exit, with brand value compounding through three owners
The deal. In June 1988, KKR led a $1.8 billion buyout of Duracell from Kraft Foods (which had inherited it from a previous Dart & Kraft conglomerate). Kraft was divesting non-food businesses to refocus on packaged food. KKR financed the deal with approximately 80% debt and committed strong operational support including a long-tenured battery industry CEO.
The thesis. Duracell was the dominant U.S. Alkaline battery brand with strong international growth potential, but Kraft had treated it as a corporate dividend stream. The thesis was: invest in brand-building (consumer marketing was minimal under Kraft), accelerate international expansion (Asia and Latin America were nascent), and either run for cash or position for strategic sale to a consumer-products major.
What they did. KKR more than doubled marketing spend, launched the iconic "Trusted Everywhere" campaign, expanded into 100+ countries, and grew international revenue from ~20% to ~40% of total within 5 years. They took Duracell public in 1991 at a $4.5B valuation, returning much of the equity check before fully exiting through Gillette's 1996 acquisition for approximately $7B in stock.
The outcome. KKR returned approximately 5x its equity over 8 years. Strong absolute returns but unremarkable by 1990s LBO standards. The more interesting story is what happened after: Gillette held Duracell for 9 years before being acquired by Procter & Gamble in 2005. P&G held it for 11 years, then sold to Berkshire Hathaway in 2016 for $4.7B in a tax-efficient stock swap (P&G shares for Duracell). Each owner monetized brand value differently; the brand itself compounded through all of them.
Best practices for VantageOS users. First, consumer brand investments compound over decades when reinvested. Duracell's marketing spend during PE ownership built brand equity that subsequent strategic owners could leverage. Don't treat marketing as discretionary OpEx in branded businesses. Second, international expansion is one of the highest-IRR uses of PE capital in consumer brands. Duracell's international growth under KKR was the bulk of the value creation. Third, exit type matters: KKR's strategic exit to Gillette delivered the maximum price because Gillette had specific synergies. Auction processes that include both strategic and financial buyers consistently outperform single-track sales.