Shares of Dominion Energy (D ) - Get Reportfell Monday after Warren Buffett’s Berkshire Hathaway (BRK.A) - Get Report (BRK.B) - Get Report said it agreed to buy the company's natural gas transmission and storage business for nearly $10 billion in cash and debt, bolstering Berkshire’s energy operations and allowing Dominion to focus on its utilities.
Berkshire Hathaway announced it was buying Dominion Energy Transmission, Questar Pipeline and Carolina Gas Transmission, as well as 50% of the Iroquois Gas Transmission System and 25% of the Cove Point liquefied natural gas facility in Maryland, the company said in a statement.
Berkshire Hathaway will pay $4 billion in cash and assume another $5.7 billion of Dominion’s debt, giving the transaction a near-$10-billion enterprise value. The transaction is expected to close in the fourth quarter, pending regulatory approvals.
The deal marks the first major purchase from Berkshire Hathaway since the coronavirus pandemic and subsequent market collapse in March - something Buffett's critics had noted might mark the end of the value investor's long-standing track record of conducting large, high-profile sector-focused transactions that juiced Berkshire's returns.
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It also greatly increases Berkshire’s footprint in the natural gas business: With the purchase, Berkshire Hathaway Energy will carry 18% of all interstate natural gas transmission in the United States, up from 8% currently.
“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.
The transaction does not include Dominion’s interest in the Atlantic Coast Pipeline. Dominion and Duke Energy (DUK) - Get Report announced separately Sunday they would cancel that project, saying delays and uncertain costs threatened its economic viability.
Shares of Dominion Energy were down 2.27% at $80.81 in trading on Monday. Berkshire Hathaway's Class B shares were up 1.92% at $182.26. The company's Class A shares were up 2.2% at $273,444 a piece.