Warren Buffett’s Berkshire Hathaway is set to gain full control of its energy subsidiary, Berkshire Hathaway Energy, after agreeing to purchase the remaining 8% stake held by the family of late billionaire Walter Scott for $2.37 billion. The deal, announced in a regulatory filing on Tuesday, will see Berkshire Hathaway Energy acquire 4.42 million shares of its voting common stock and a $100 million bond due in 2057, in exchange for the cash payment and a $600 million one-year note. The Scott family will also receive approximately 1.6 million Berkshire Class B shares, valued at around $737 million based on Monday’s closing price.
The transaction, expected to be completed in the current quarter pending regulatory approvals, will increase Berkshire Hathaway’s stake in its energy subsidiary from 92% to 100%. The Omaha, Nebraska-based conglomerate has been expected to buy out the Scott family’s stake for some time, although the purchase price is lower than some analysts had anticipated.
The deal will allow Berkshire Hathaway to deploy some of its vast cash reserves, which stood at $276.9 billion as of June 30. According to Cathy Siefert, an analyst at CFRA Research, “it makes sense” for Berkshire to make the purchase, given its significant cash holdings and the current low-yield environment.
Berkshire Hathaway Energy, which operates energy, utility, and pipeline businesses, as well as one of the largest U.S. residential real estate brokerages, has faced challenges in recent years, including lawsuits related to wildfires in Oregon and northern California in 2020. The company was previously known as MidAmerican Energy before adopting its current name in 2014. Greg Abel, who led Berkshire Hathaway Energy for a decade, is expected to succeed Warren Buffett as Berkshire’s CEO in the future.
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