When it comes to money, Warren Buffett isn't one to monkey around. Well, maybe just this once. Pepsi's (NYSE: PEP) summer promotion has been a doozy. Through next month, the soft-drink company will single out a thousand lucky finalists in a contest that may land the winner a billion-dollar prize during a live two-hour television show.
With Yahoo! (Nasdaq: YHOO) manning the site for the Pepsi Billion Dollar Sweepstakes, the fact that a chimpanzee will ultimately decide the fate of the potential billionaire isn't as shocking as the company that will pay out the ransom under the rare event that the grand prize is doled out. Yes, it's Berkshire Hathaway (NYSE: BRK.A) that will be on the hook for the billion-dollar payday in back-ended disbursements (or a $250 million lump sum).
Irony runs soda syrup thick here because, of course, Berkshire Hathaway has been a longtime investor in Pepsi's rival Coca-Cola (NYSE: KO). But Berkshire investors don't need to be biting their nails when the Pepsi chimp dictates fortune or famine under the television studio spotlight in a few weeks.
Pepsi paid an undisclosed seven-figure sum for Berkshire to assume the risk of the show's final contestant winning it all. As an insurance giant, Berkshire Hathaway didn't need to study its actuary tables to realize that this was a good deal. The odds of someone walking away with the billion-dollar prize is a bleak million-to-one long shot. That's chimp chump change for Berkshire, which should emerge as the real winner here.
Berkshire will have to pay no more than 250 times what it is receiving from Pepsi and the chances of paying it out, to any of the thousand participants, are one in a thousand? Nice odds. Find a casino that pays out just 25% of the take? Even the state-run lotteries have better distribution chances. Berkshire looks to be the one that will have a Coke and a smile by the time it's all over.
Recent Articles by
- 01/17/2017 - Can Zoe's Kitchen Stock Bounce Back From Last Week's 15% Drop?
- 01/17/2017 - Netflix Streaming Joins the iPhone in Turning 10
- 01/17/2017 - Disney World's Rival Raises the Bar on Virtual Queues
- 01/15/2017 - Will Disney World Start Charging for FastPass?
- 01/12/2017 - 3 Reasons Why Apple Is No Threat to Netflix