May 29 A Berkshire Hathaway Inc unit
will pay $5.6 billion for NV Energy Inc, the electric
utility serving Las Vegas and its power-hungry casinos, in yet
another large energy deal for Warren Buffett in the western
Berkshire's MidAmerican Energy Holdings Co said on Wednesday
it will buy NV Energy for $23.75 per share, a 23 percent premium
to NV's Wednesday closing price. NV Energy shares rose to $23.90
in after-hours trading on Wednesday.
It is not uncommon for shares in Buffett's target companies
to trade slightly above the offer price, even where there are no
competing bids and Buffett has said explicitly the offer is his
best and final one.
"Berkshire has a lot of cash earning very little. If this is
a $5.6 billion cash deal, then Berkshire turns low-yielding cash
into $330 million of earnings," said Steve Check, president of
Check Capital Management, an investment advisory firm, referring
to NV Energy's earnings over the last 12 months.
"Nevada has historically been a fairly fast growth area,"
Check said. "Add it all up, and I'm sure this will be another
good, safe investment for Berkshire."
NV Energy, which is based in Las Vegas and serves about 2.4
million people in Nevada, said last month it would accelerate
the retirement of its coal-fired power generating facilities and
the construction of natural gas and renewable power plants.
"We are pleased to make a long-term investment in Nevada's
economy," Buffett, the billionaire investor who is Berkshire
Hathaway's chairman, said in a statement.
In 2006, MidAmerican paid $5.1 billion for PacifiCorp, which
serves California, Idaho, Oregon, Utah, Washington and Wyoming.
The deal is also complementary to recent MidAmerican
investments in renewable energy, including some big bets next
door in California. MidAmerican is building the world's largest
photovoltaic solar power plant in San Luis Obispo County, as
well as a 160-megawatt geothermal plant near the Salton Sea.
NV Energy has just passed 1 gigawatt of renewable energy,
with a target of 25 percent renewables by 2025, and is the
largest user of geothermal energy in the United States.
Once the NV Energy deal is complete, MidAmerican will have
assets of about $66 billion and its regulated electric and gas
utilities will serve 8.4 million customers.
According to a filing with U.S. financial regulators, NV
Energy will have to pay MidAmerican $170 million if it
terminates the merger under certain circumstances.
The deal is expected to close in the 2014 first quarter.
Lazard served NV Energy as financial adviser, while Sidley
Austin LLP, Hogan Lovells and Reno-based Woodburn and Wedge were
its legal advisers.