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

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, next in line to succeed billionaire Warren Buffett as chief executive, has 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 an agreement between them and the family of the late billionaire philanthropist Walter Scott, who own an 8% stake.

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

Berkshire now owns 92% of Berkshire Hathaway Energy, which has energy, utilities and pipeline operations and a major US real estate brokerage.

Born in Omaha, Scott was a longtime Berkshire executive and friend of Buffett who died last September at age 90.

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

“I suspect that if Abel sells, Walter Scott’s estate could also be liquidated,” said Edward Jones & Co-analyst James Shanahan.

CFRA Research analyst Cathy Seifert added, “It was a little surprising that there wasn’t a regulatory filing for such an important transaction before.”

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 the chief of MidAmerican in 2008 and the vice chairman of Berkshire overseeing its dozens of non-insurance companies in 2018.

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

Abel and Ajit Jain, a Berkshire vice chairman who oversees the insurance business, each received $19 million over the past three years. Buffett sets their compensation.

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