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

Greg Abel at the annual meeting of Berkshire Hathaway in Los Angeles California. May 1, 2021.

Gerard Miller | CNBC

Berkshire Hathaway said on Saturday that Vice President Greg Abel, the next man to succeed the billionaire Warren Buffett as chief executive, 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 it and the family of late billionaire philanthropist Walter Scott, which owns an 8% stake.

Buffett’s Nebraska-based Omaha Group charged $362 million in capital, reflecting a premium over the book value of the shares.

Berkshire currently owns a 92% stake in Berkshire Hathaway Energy, whose businesses include energy, utilities and pipeline operations, and a major US real estate brokerage.

Scott, a native of Omaha, a longtime Berkshire director and friend of Buffett, passed away last September at the age of 90.

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

Edward Jones & Co analyst James Shanahan said: “I suspect that if Abel were to sell, Walter Scott’s estate could also be liquidated.

CFRA Research analyst Cathy Seifert added: “It’s a bit surprising that there hasn’t been an earlier regulatory filing for such a significant transaction.”

Shanahan and Seifert comprise 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 it.

He became a director of MidAmerican in 2008, and vice chairman of Berkshire oversaw dozens of non-insurance businesses in 2018.

Buffett turns 92 on August 30. In May 2021, he said that if he stepped down, Abel would become Berkshire’s chief executive.

Abel and Ajit Jain, the Berkshire vice president who oversees its insurance businesses, have each been paid $19 million over the past three years. Buffett sets their compensation.

Shanahan said the sale of Abel “makes me wonder if he’s buying shares of Berkshire. He doesn’t own a lot and could use the proceeds to get more skins in the game.”

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