Warren Buffett is buying the rest of Berkshire Hathaway’s utilities, but investors are left guessing at the price

OMAHA, Neb. (AP) – Warren Buffett’s Berkshire Hathaway is buying the rest of its commercial premises from the estate of the longtime executive who died three years ago, but it’s unclear exactly how much the huge utilities business will pay for that 8% stake in the company.

Berkshire Hathaway Energy said in a regulatory filing Tuesday that it would pay Walter Scott’s family $2.4 billion in cash and issue a number of Berkshire Class B shares, equivalent to 1.6 million shares of the utility company, but because the company’s shares are not publicly traded it is difficult to estimate the total value of the transaction, which is to be finalized this year. In total, Berkshire is buying more than 4.4 million shares of utility companies to secure 100% ownership.

“This filing has left me with a lot of questions, but they are not in an investor relations role, so I don’t expect answers to those questions,” said Cathy Seifert, an analyst at CFRA Research. “We hope there will be more details when they announce earnings.”

Berkshire Hathaway Energy, based in Des Moines, Iowa, includes MidAmerican Energy, Pacificorp and NV Energy in Nevada, and a Canadian electricity transmission services provider called AltaLink.

Buffett doesn’t like to reveal more than he has to, and parent company Berkshire Hathaway hasn’t issued a press release or filed any filings with the Securities and Exchange Commission, leaving investors to speculate.

Apparently Buffett doesn’t believe this deal is big enough to have a material impact on Berkshire Hathaway, considering it just reported profits of more than $30.3 billion and had $277 billion in cash in the second quarter.

But a similar deal, when Berkshire bought vice chairman Greg Abel’s 1% stake in the utility for $870 million two years ago, suggests the deal with the Scott family is significant. Abel is expected to eventually replace Buffett as CEO of Berkshire Hathaway. If Berkshire had agreed to pay the same price for the shares sold by the Scott family, the deal should have been worth $6.96 billion.

Of course, over the past two years, one of Berkshire’s largest utilities, PacifiCorp, has paid out hundreds of millions of dollars in settlements related to wildfires in Oregon and California that destroyed thousands of homes in 2020, and Berkshire Hathaway has seen losses from wildfires in amounting to USD 2.7 billion.

In this year’s letter to Berkshire Hathaway shareholders, Buffett was negative about the utility industry’s prospects. However, it is unclear what the current value of the utility’s shares is. Buffett did not immediately respond to questions about the Scott family deal, and the utility company declined to comment beyond what is in regulatory filings.

In addition to utilities, Berkshire Hathaway owns the BNSF railroad, several major insurance companies, including Geico, and a diverse range of manufacturing and retail companies, including aerospace parts maker Precision Castparts and better-known brands such as Dairy Queen and See’s Candy.