In an effort to widen its presence in the energy sector,
Berkshire Hathaway Inc.
's (BRK.A) (
), energy company MidAmerican Energy Holdings has announced to
buy NV Energy Inc. for $5.6 billion or $23.75 per share.
This price represents a 23% premium to NV's Wednesday closing
price of $23.67.
Based in Nevada, NV Energy is a electric and natural gas
The deal will be a strategic fit for Berkshire which already
derives 22% of revenue from energy business.
The news sent Berkshire's shares soaring up 1.2% which closed
The deal is expected to see light in the first quarter of
2014. Berkshire's huge cash holding of $48 billion will fund the
The deal will enable Berkshire to serve nearly 1.3 million
electric and natural gas customers in Nevada. MidAmerican already
serves 7.1 million Americans across 10 states. The deal will also
add assets to MidAmerican's business which will be worth $66
Berkshire bought MidAmerican in 2000.
Earlier this year Berkshire made a big acquisition of
H. J. Heinz Company
) for $23.6 billion. Buffett's long-held acquisition strategy is
to acquire businesses with consistent earning power, good returns
on equity and able and honest management at sensible prices.
In 2012, Berkshire completed several smaller-sized business
acquisitions, most of which were sort of "bolt-on" acquisitions
to several of its existing business operations. Aggregate
consideration paid in 2012 for acquisitions was approximately
$3.2 billion, which included $438 million for entities that will
develop, construct and subsequently operate renewable energy
Berkshire has grown over decades by making numerous
acquisitions and at present holds over 80 operating subsidiaries
under it. These subsidiaries are operated as independent entities
with respective managers responsible for operating decisions.
Berkshire Hathaway retains a Zacks Rank #2 (Buy). Other
players from the same industry such as
Hanover Insurance Group Inc.
) both with Zacks Rank #1(Strong Buy) are worth considering.
BERKSHIRE HTH-B (BRK.B): Free Stock Analysis
HEINZ (HJ) CO (HNZ): Free Stock Analysis
HANOVER INSURAN (THG): Free Stock Analysis
ALLEGHANY CORP (Y): Free Stock Analysis
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