Warren Buffett took full control of Berkshire Hathaway Energy, a utility giant that it has owned a majority stake in since 1999, but the business has been a drag on the conglomerate. The Omaha-based Berkshire entered a deal to acquire the 8% remaining stake in BHE from the heirs of the late Walter Scott, a former director and a lifelong friend of Buffett who died in 2021. Berkshire bought the stake for $2.
37 billion in cash, $600 million in debt as well as a significant amount of Berkshire Class B shares , according to a regulatory filing. Analysts and investors who watch the conglomerate closely seem to believe that the deal price marked a drop in valuation for BHE, whose businesses including energy, utility and pipeline operations experienced a tumultuous period with liabilities related to wildfires. "Buffett didn't pay a premium for BHE, which implies that he is still concerned about the future of the business," Bill Stone, chief investment officer at Glenview Trust Company and a Berkshire shareholder, told CNBC.
Berkshire Vice Chairman Greg Abel, Buffett's designated successor, sold his 1% stake in BHE for $870 million at a much higher valuation just two years ago. Abel is currently the chairman of BHE. 'A Costly Mistake' Buffett has recently expressed a fatalistic view about the utility industry amid staggering losses from wildfires as well as a tough regulatory environment.
"It will be many years until we know the final tally from BHE's forest-fire losses and can intell.