Berkshire CEO-designate Abel sells stake in energy company he led for $870 million

Greg Abel at Berkshire Hathaway’s annual assembly in Los Angeles California. May 1, 2021.

Gerard Miller | CNBC

Berkshire Hathaway mentioned on Saturday that Vice Chairman Greg Abel, who’s subsequent in line to succeed billionaire Warren Buffett as chief government, bought his 1% stake in the company’s Berkshire Hathaway Energy unit for $870 million.

In its quarterly report, Berkshire mentioned the energy unit purchased out Abel in June beneath an settlement amongst them and the household of the late billionaire philanthropist Walter Scott, which owns an 8% stake.

Buffett’s Omaha, Nebraska-based conglomerate took a $362 million cost to capital, reflecting the premium over how a lot the stake’s worth was mirrored on its books.

Berkshire now owns 92% of Berkshire Hathaway Energy, whose companies embrace energy, utility and pipeline operations and a big U.S. actual property brokerage.

Scott, an Omaha native, was a longtime Berkshire director and Buffett buddy who died final September at age 90.

Abel’s sale means that the Scott household’s stake could also be price $7 billion. Berkshire ended June with greater than $105 billion of money.

“I suspect that if Abel is selling, Walter Scott’s estate might also liquidate,” mentioned Edward Jones & Co analyst James Shanahan.

CFRA Research analyst Cathy Seifert added: “It was a little surprising there wasn’t an earlier regulatory filing for such a significant transaction.”

Shanahan and Seifert cowl Berkshire.

Scott’s household couldn’t instantly be reached for remark. Berkshire Hathaway Energy didn’t instantly reply to a request for remark.

Abel, 60, a hockey fan who grew up in Edmonton, Alberta, joined Berkshire Hathaway Energy, then often known as MidAmerican Energy, in 1992, eight years earlier than Berkshire took it over.

He turned MidAmerican’s chief in 2008, and Berkshire’s vice chairman overseeing its dozens of non-insurance companies in 2018.

Buffett turns 92 on August 30. He mentioned in May 2021 that if he stepped down, Abel would turn out to be Berkshire’s chief government.

Abel and Ajit Jain, a Berkshire vice chairman overseeing its insurance coverage companies, had been every paid $19 million in every of the final three years. Buffett units their compensation.

Shanahan mentioned Abel’s sale “makes me wonder if he will buy Berkshire stock. He doesn’t own very much, and might use proceeds to have more skin in the game.”

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