Berkshire Hathaway drops pipeline purchase over antitrust concerns

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Buffett’s Berkshire Hathaway (BRKB) on Monday announced that it was abandoning plans to buy a major gas pipeline for more than $ 1.7 billion due to antitrust concerns.
Oil giant Energy of Domination (re) already finalized the sale of the gas transmission assets to the energy subsidiary of Berkshire Hathaway in November. But Dominion said the plan to sell its Questar Pipelines business to Buffett’s company was canceled due to “lingering uncertainty associated with obtaining Federal Trade Commission clearance” for that part of the business. agreement.

Questar operates primarily in Utah, Wyoming, and Colorado. So there may have been concerns from the FTC about the overlap with Berkshire Hatahway Energy’s subsidiary, PacifiCorp, which owns energy company Rocky Mountain Power which serves customers in Utah, Wyoming and Idaho.

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Dominion said in November, when the initial part of the deal was finalized, that it had already received around $ 1.3 billion in cash from Berkshire in anticipation of the full sale being finalized. Dominion also said it plans to transfer around $ 430 million of Questar debt to Berkshire once the deal is done.

Now that the Questar sale is off the table, Dominion has said he will begin a competitive process to sell the business to another bidder, adding that he hopes to secure a deal by the end of this year. .

The decision to end the sale of the pipeline comes just days after President Joe Biden signed an executive order calling for a closer review of mergers – including deals already made – as well as more measures to promote competition in the US economy.

The cancellation of the Questar transaction is a blow to Berkshire, a sprawling conglomerate that owns businesses ranging from Geico, Dairy Queen, Duracell and Fruit of the Loom to the Burlington Northern Santa Fe Railroad and NetJets.

Berkshire’s energy subsidiary generated $ 4.8 billion in sales in the first quarter of 2021, or about 7.5% of the company’s total sales. But the energy sector is strategically very important for the future of the company.

Greg Abel, the current chairman of Berkshire Hathaway Energy and vice president of non-insurance operations at Berkshre, has been chosen by Buffett to eventually succeed as CEO of Berkshire once Buffett, 90, retires or dies.

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