Lacking energy

30 May 2013 By Christopher Swann

Berkshire Hathaway’s $5.6 bln bet on NV Energy suggests billionaire investor Warren Buffett is coming up short on decent ways to deploy his cash. With utility mergers offering meager synergies thanks to regulators, Berkshire will struggle to cover its cost of capital.

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Berkshire Hathaway’s power production unit MidAmerican Energy Holdings will pay $5.6 billion for NV Energy, the electric utility that serves Las Vegas and its power-hungry casinos, according to a statement by the companies on May 29.
MidAmerican Energy will purchase NV Energy’s common stock for $23.75 per share, a 23 percent premium to NV’s closing price on May 29.
Once the deal is complete, MidAmerican Energy will have assets of about $66 billion and its regulated electric and gas utilities will serve 8.4 million customers.

(An earlier version of this item incorrectly referred to one-year Treasuries in the final paragraph).

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