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Buffett’s Berkshire Increases Footprint In US Interstate Natural Gas Business With Dominion Purchase

By John F. Heerdink, Jr.

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.

Vista Partners LLC (”Vista”) is a California Registered Investment Advisor based in San Francisco. Vista delivers timely and relevant insights via the website: www.vistapglobal.com with daily stories, weekly market updates, monthly macroeconomic newsletters, podcasts, & Vista’s proprietary equity and market research to help you stay informed and stay competitive. Vista’s mission is to invest partner capital while arming investors with a comprehensive global financial perspective across all market sectors. Vista also seeks to provide select issuers with actionable advice regarding fundamental development, corporate governance, and capital market directives.

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(Read Original Story: Warren Buffett’s Berkshire buys Dominion Energy natural gas assets in $10 billion deal in CNBC)


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