Warren Buffett’s Berkshire Hathaway has made its first “bargain” buy of the COVID-19 curtailed period, snapping up Dominion Energy’s gas transmission and storage assets for $US10 billion.
The New York Times’ DealBook reported that the purchase was Buffett’s biggest in four years, “putting to use some of Berkshire Hathaway’s $137 billion cash pile”.
“It will probably quell some investor anxiety about Mr Buffett’s recent drought of deal-making,” the publication added.
In a market update Dominion Energy said the transaction was valued at US$9.7 billion and included the assumption of $US5.7 billion of existing indebtedness.
Warren Buffett, chairman of Berkshire Hathaway, said: “I admire Tom Farrell (Dominion Energy chairman and CEO) for his exceptional leadership across the energy industry as well as within Dominion Energy. We are very proud to be adding such a great portfolio of natural gas assets to our already strong energy business.”
Thomas Farrell added: “Over the past several years the company has taken a series of steps – including mergers with Questar Corporation and SCANA Corporation, and the divestiture of Blue Racer Midstream and merchant generation assets – to increase materially the state-regulated nature of our profile, enhance the customer experience, strengthen our balance sheet, and improve transparency and predictability. Our mission over that period has remained the same: providing round-the-clock affordable and sustainable energy, world-class customer service, and meaningful community engagement.
“We offer an industry-leading clean-energy profile which includes a comprehensive net zero target by 2050 for both carbon and methane emissions as well as one of the nation’s largest zero-carbon electric generation and storage investment programs. Over the next 15 years we plan to invest up to $55 billion in emissions reduction technologies including zero-carbon generation and energy storage, gas distribution line replacement, and renewable natural gas. In addition, between 2018 and 2025 we expect to retire more than four gigawatts of coal- and oil-fired electric generation.
“This narrowing of focus will also allow us to increase our long-term earnings growth rate guidance by around 30 percent. Our rebased dividend policy better reflects our revised operating and financial strengths, aligns with our best-in-class industry peers and allows us to grow our dividend much more rapidly than before.
“This transaction represents another significant step in our evolution as a company, allowing us to focus even more on fulfilling utility customer needs and positioning us for a bright and increasingly sustainable future.”