Buffett's Berkshire Hathaway Bets Big With Dominion Deal

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Warren Buffett is back to his old transactional money making tricks.

The oracle of Omaha's Berkshire Hathaway (BRK.A) - Get Report (BRK.B) - Get Report said it agreed to buy Dominion Energy's  (D) - Get Report 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.

Specifically, Berkshire Hathaway Energy is 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 Energy 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 deal marks the first major purchase from Berkshire since the coronavirus pandemic and subsequent market collapse in March - something Buffett's critics had noted might market the end of the value investor's long-standing track record of conducting large, high-profile sector-focused transactions that juiced Berkshire's returns.

While Buffett and Berkshire had made a few moves in some sectors including the airline industry, the Dominion deal marks the first major sector-focused transaction for Berkshire - and also boosts its 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. 

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