Berkshire Hathaway buys full control of its energy unit

By Jonathan Stempel

(Reuters) – Berkshire Hathaway will take full ownership of Berkshire Hathaway Energy after the unit of Warren Buffett’s conglomerate agreed to pay $2.37 billion for the 8 percent stake held by the family of late billionaire philanthropist Walter Scott.

According to a regulatory filing on Tuesday, Berkshire Hathaway Energy will acquire 4.42 million shares of its common stock with voting rights and a $100 million bond due 2057 in exchange for $2.37 billion in cash and a $600 million one-year note.

Scott’s family will also receive about 1.6 million Berkshire Class B shares worth about $737 million by Monday’s close.

Berkshire Hathaway Energy expects to complete the transactions in the current quarter, pending regulatory approval.

It said Berkshire, based in Omaha, Nebraska, would eventually own 100 percent of its voting stock, up from 92 percent now.

Neither Berkshire Hathaway nor Berkshire Hathaway Energy immediately responded to requests for comment.

Scott, a native of Omaha, was a longtime Berkshire director and friend of Buffett, who died in September 2021 at age 90.

Analysts had long expected Berkshire to buy his family’s stake, considering that the purchase price is lower than forecast.

In June 2022, Berkshire vice chairman Greg Abel, who led Berkshire Hathaway Energy for a decade, sold his 1% stake to Berkshire for $870 million.

But the power unit’s PacifiCorp utility has since faced many lawsuits from homeowners and business owners who blame it for causing wildfires in Oregon and northern California in 2020.

The acquisition also allows Berkshire to spend some of its cash, which totaled $276.9 billion as of June 30.

“It makes sense,” said Cathy Seifert, an analyst at CFRA Research. “Berkshire has a significant pile of cash to draw on at a time when U.S. Treasury yields are falling and will likely continue to fall.”

She said that, however, the energy business “has had quite a few challenges since Abel sold his stake, not the least of which is the fire litigation”.

Berkshire Hathaway Energy owns energy, utility and pipeline operations and one of the largest residential real estate agencies in the US.

Buffett’s conglomerate originally bought a 76 percent stake in 2000, when the unit was known as MidAmerican Energy. The unit adopted the name Berkshire Hathaway Energy in 2014.

Abel, 62, is expected to eventually succeed Buffett, 94, as Berkshire’s chief executive.

(This story was amended to correct the spelling of the analyst’s name in paragraph 12)

(Reporting by Jonathan Stempel in New York)