Warren Buffett’s Berkshire Hathaway has made its biggest investment move in a year with a $US9.7 billion purchase of Dominion Energy’s natural gas transmission and storage network.
Berkshire Energy will pay $US4 billion for the assets and take on $US5.7 billion of debt, for a $US9.7 billion enterprise value.
The deal is the largest since Berkshire bought $US10 billion of preferred shares to help finance Occidental’s $US55 billion takeover of Anadarko Petroleum a year ago.
Berkshire ended the March quarter with $US137.2 billion of cash, so the Dominion deal won’t make much of a dent.
The deal was revealed early Monday morning, US time. “We are very proud to be adding such a great portfolio of natural gas assets to our already strong energy business,” Buffett said in a statement.
Berkshire controls 91.1% of Berkshire Hathaway Energy, which owns the MidAmerican Energy, NV Energy and PacifiCorp utilities, natural gas pipelines, wind power assets, and electricity businesses in Britain and Canada as well as the US midwest and southwest. Its chairman, Greg Abel, is also a Berkshire vice chairman and possible successor to Buffett.
The purchase includes more than 12,390 kilometres of natural gas transmission lines and 900 billion cubic feet of gas storage.
Berkshire Hathaway Energy is buying Dominion Energy Transmission, Questar Pipeline, Carolina Gas Transmission, 50% of the Iroquois Gas Transmission System, and 25% of the Cove Point liquefied natural gas facility in Maryland.
Dominion will retain 50% of Cove Point. Brookfield Asset Management, the Canadian infrastructure investor owns 25%.
Separately Dominion and Duke Energy Inc announced that they are abandoning their $US8 billion Atlantic Coast Pipeline, running under the Appalachian Trail and through West Virginia, Virginia, and North Carolina.
Dominion and Duke cited delays and uncertain costs, despite a favourable US. Supreme Court decision last month which greenlighted the controversial project that would have impacted the historic Appalachian Trail.