Reportedly, Warren Buffett’s Berkshire is all set to buy the natural gas transmission and storage assets of Dominion Energy for $4B, including the assumption of debt, the deal total balloons to almost $10 billion. The deal marks the first major purchase of the conglomerate since the coronavirus pandemic and the resulting market decline in March. The deal is subject to regulatory approval and is expected to close in the fourth quarter of this year.
Dominion’s transition to a regulated utility company will now focus on clean energy production from wind, solar, and natural gas. Dominion expects that 90% of its future operating earnings come from its utility companies that deliver energy to states like Virginia, North and South Carolina, Ohio, and Utah serving more than 7 million customers.
Dominion has revised its financial figures as a result of a sale and now expects its operating earnings for 2020 to be $3.37 to $3.63 a share much lower to its previous guidance of $4.25 to $4.60 a share. The company also plans to cut its dividend in the fourth quarter to 63 cents a share, from 94 cents a share. An operating earnings payout of 65% is expected in comparison to the earlier payout of 85%, post the transaction.
Berkshire Hathaway Energy will carry 18% of all interstate natural gas transmission in the United States, up from the current 8% post the transaction increasing its footprint in the natural gas business. Berkshire Energy to pay $4 billion in cash for the assets, and assume $5.7 billion in debt. Dominion plans to use about $3 billion of the after-tax proceeds to buy back its shares later this year.
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