Warren Buffett Goes to Las Vegas: MidAmerican to Acquire NV Energy

Warren Buffett
Warren Buffett

Warren Buffett's team at Berkshire Hathaway Inc. (NYSE: BRK-A) is out making yet another acquisition. In this case is comes from the MidAmerican utility unit, which is acquiring NV Energy Inc. (NYSE: NVE) to be the primary utility for about 1.3 million electric and natural gas customers in Nevada. While this may be listed as a $10 billion deal based upon the enterprise value, we would not really consider this acquisition as one of Mr. Buffett's famed "Whale of a deal."

MidAmerican will pay $23.75 per share in cash and both companies have said that their respective boards of directors have unanimously approved the deal. The transaction is currently expected to be completed in the first quarter of 2014.

NV Energy NV Energy provides services to roughly 2.4 million citizens of Nevada and nearly 40 million tourists annually. MidAmerican Energy will have assets of approximately $66 billion and its regulated electric and gas utilities will serve 8.4 million customers after this deal is closed upon.

As a part of MidAmerican, NV Energy will gain access to additional operational and financial resources. It will have the opportunity to combine MidAmerican's management experience in renewable energy with Nevada's renewable resources. The company will operate as a separate corporate subsidiary of MidAmerican Energy and will continue to be headquartered in Las Vegas.

Warren Buffett was quoted saying, "This is a great fit for Berkshire Hathaway Inc. (NYSE: BRK-B), and we are pleased to make a long-term investment in Nevada's economy. Through MidAmerican, we have found in NV Energy a great company with similar values, outstanding assets, and a superb management team."

NV Energy's market cap was of the close was $4.54 billion and its closing price of $19.28 compared to a 52-week trading range of $16.90 to $21.63. Shares are trading up around $23.80 in the after-hours, but we would warn merger-arbitrage investors that Mr. Buffett and his team almost never pay more than the original terms agreed to even if others believe a company is worth more money.

NV Energy's dividend yield as of the closing price on Wednesday was about 3.8%.

Filed under: 24/7 Wall St. Wire, Buffett, Corporate Governance, Infrastructure, Mergers & Acquisitions, Mergers and Buy Outs, Utilities Tagged: BRK-A, BRK-B, NVE