Berkshire Hathaway Inc said on August 6 that Vice Chairman Greg Abel, who is expected to replace billionaire Warren Buffett as chief executive, offloaded his 1% stake in the firm’s Berkshire Hathaway Energy unit for up to $870 million.
In its quarterly report, Berkshire stated that the energy unit bought out Abel in June under an official agreement between them and the family of the late billionaire philanthropist Walter Scott, which has an 8% stake.
Buffett’s Omaha, Nebraska-based conglomerate acquired a $362 million charge to capital, reflecting the premium over how much this stake’s value was represented on its books. Berkshire currently owns 92% of Berkshire Hathaway Energy, whose businesses consist of utility, energy, and pipeline operations and a huge U.S. real estate brokerage.
Scott, being an Omaha native, was a longtime Buffett friend and Berkshire director who died in September 2021 at age 90. Abel’s sale indicates that the Scott family’s stake might be worth $7 billion. Berkshire ended June with over $105 billion of cash.
Edward Jones & Co analyst James Shanahan stated:
“I suspect that if Abel is selling, Walter Scott’s estate might also liquidate.”
Cathy Seifert, CFRA Research analyst, added:
“It was a little surprising there wasn’t an earlier regulatory filing for such a significant transaction.”
Shanahan and Seifert mainly cover Berkshire.
Scott’s family did not comment and Berkshire Hathaway Energy declined to comment.
Abel is a 60-year-old hockey fan who grew up in Edmonton, Alberta. He joined Berkshire Hathaway Energy, which at the time was known as MidAmerican Energy, around eight years before Berkshire acquired it.
He became MidAmerican’s chief in 2008, and Berkshire’s vice chairman in charge of its many non-insurance businesses in 2018. Buffett will be 92 on August 30. He stated in May 2021 that when he stepped down, Abel would become Berkshire’s chief executive.
Abel together with Ajit Jian, a Berkshire vice chairman overseeing its insurance businesses, were each paid $19 million annually for the past three years. Buffett is known to set their compensation.
Shanahan stated that Abel’s sale:
“Makes me wonder if he will buy Berkshire stock. He doesn’t own very much, and might use proceeds to have more skin in the game.”