Berkshire CEO-designate Abel sells stake in energy company he led for $870 million

Greg Abel at the Berkshire Hathaway Annual Meeting in Los Angeles, California. May 1, 2021.

Gerard Miller | CNBC

Berkshire Hathaway said on Saturday that Vice Chairman Greg Abel, who is next in line to succeed billionaire Warren Buffett as CEO, sold his 1% stake in the company’s Berkshire Hathaway Energy unit for $870 million.

In its quarterly report, Berkshire said the energy unit bought Abel in June under a deal between them and the family of the late billionaire philanthropist Walter Scott, which owns an 8% stake.

Buffett’s Omaha, Nebraska-based conglomerate took a $362 million capital charge, reflecting the premium on how much the stake’s value was reflected on its books.

Berkshire now owns 92% of Berkshire Hathaway Energy, whose businesses include energy, utility and pipeline operations and a large US real estate agency.

Scott, an Omaha native, was a longtime Berkshire director and friend of Buffett’s who died last September at age 90.

The sale of Abel suggests the Scott family’s stake may be worth $7 billion. Berkshire ended June with more than $105 billion in cash.

“I suspect that if Abel is selling, the Walter Scott estate could also be liquidated,” said James Shanahan, an analyst at Edward Jones & Co.

CFRA Research analyst Cathy Seifert added: “It was a bit surprising that there was no prior regulatory filing for such a significant transaction.”

Shanahan and Seifert cover Berkshire.

Scott’s family could not be immediately reached for comment. Berkshire Hathaway Energy did not immediately respond to a request for comment.

Abel, 60, a hockey fan who grew up in Edmonton, Alberta, joined Berkshire Hathaway Energy, then known as MidAmerican Energy, in 1992, eight years before Berkshire took over.

He became head of MidAmerican in 2008 and vice president of Berkshire overseeing its dozens of non-insurance businesses in 2018.

Buffett turns 92 on August 30. He said in May 2021 that if he stepped down, Abel would become Berkshire’s chief executive.

Abel and Ajit Jain, a Berkshire vice president who oversees its insurance businesses, each received $19 million in each of the last three years. Buffett sets his compensation.

Shanahan said the sale of Abel “makes me wonder if he’s buying Berkshire stock. He doesn’t own much and could use the proceeds to get more skin in the game.”

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