No. of Recommendations: 8
"but he was actually selling Berkshire stock to buyback minority interests at BHE in 2024."
https://rationalwalk.com/berkshire-hathaway-acquir...Great write up by RW:
Berkshire Hathaway Acquires BHE Minority Interests
Published on October 1, 2024
Berkshire Hathaway Energy (BHE) is now a wholly owned subsidiary of Berkshire Hathaway.
On September 30, 2024, BHE repurchased part of the minority interest held by family members of the late Walter Scott Jr., along with interests owned by “related or affiliated entities.” The remainder of the minority interest was acquired by Berkshire Hathaway in exchange for Berkshire Class B common stock.
Prior to the transaction, Berkshire Hathaway owned a 92% interest in BHE. The transaction has interesting implications regarding the diminished value of BHE after recent wildfire litigation and changes in the regulatory and political landscape. In addition, since Berkshire Hathaway issued shares to pay for part of the transaction, there may be implications regarding Warren Buffett’s view of the valuation of Berkshire shares.
The following is my analysis of the transaction:
The valuation of the BHE common stock is listed as $650 per share in the repurchase agreement.
BHE acquired 4,424,494 shares of BHE common stock at $650 per share, implying a total cost of $2,875,921,100.
BHE acquired the 5% Junior Subordinated Debentures due in 2057 with an aggregate principal amount of $100,000,450. This security was owned by the same minority investors who sold the common stock. I calculate that the cost of acquiring this security was $91,359,744.
BHE paid total consideration of $2,367,280,844 in cash and issued a promissory note for $600,000,000 due and payable in one year and bearing interest equal to the one year treasury rate.
BHE funded the cash portion of the transaction “with cash on hand, including proceeds received from the sale of certain investments.”
In a separate transaction, Berkshire Hathaway acquired 1,601,258 shares of BHE common stock for “an equivalent value in shares of Berkshire Hathaway Inc. Class B common stock.” Berkshire’s Class B shares closed at $460.26 on September 30, 2024. Assuming a valuation of $650 per share of BHE common stock, the transaction value was $1,040,817,700 and was funded with issuance of 2,261,369 Berkshire Hathaway Class B shares.
