Berkshire eyes more energy deals after C$3.2b AltaLink acquisition
Buffett's energy unit seeks to boost investment as its presence extends to Alberta's power grids
Berkshire Hathaway agreed to buy SNC-Lavalin's AltaLink, the operator of electric transmission lines in western Canada, as Warren Buffett's company expands its investment in energy.
The purchase price will be about C$3.2 billion (HK$22.6 billion) in cash. AltaLink had C$5.9 billion of assets by December 31, including 280 substations and about 12,000 kilometres of transmission lines, Berkshire said.
Buffett's power unit, renamed this week as Berkshire Hathaway Energy from MidAmerican, has been growing through acquisitions under Greg Abel, chief executive of the business. Abel bought NV Energy, Nevada's largest electricity utility, last year for US$5.6 billion and also oversees subsidiaries including Kern River and PacifiCorp. Buffett told shareholders in a report posted on March 1 that the NV deal would not be Abel's last.
"He made the point in his letter that MidAmerican retains more of its earnings than any utility company, so they have a lot of cash to play with," said Jeff Matthews, an investor in Berkshire.
AltaLink owns more than half the transmission grid in the Canadian province of Alberta and serves 85 per cent of its population. Net income for the unit was C$161.6 million on revenue of C$534 million last year. AltaLink said in a separate statement that it would operate under its current name within the Berkshire business.
For Montreal-based SNC, the sale ends a months-long review about the fate of the AltaLink unit. Canada's largest engineering and construction company began weighing options for the business last year as chief executive Robert Card sought to exit some infrastructure investments.