Buffett Buys PacifiCorp for $5.1 Billion

Warren Buffett readies to close a deal on his second electric power company.
Stephen TaubMay 24, 2005

Warren Buffett, the quintessential value investor, is energizing his holdings. His MidAmerican Energy Holdings Co. agreed to shell out $5.1 billion to buy PacifiCorp from ScottishPower. PacifiCorp operates in six Western states, including California, Oregon, and Washington.

The deal’s total value is roughly $9.4 billion, which includes $4.3 billion in net debt and preferred stock. The merger will create an energy holding company serving approximately three million electric and natural gas customers in 10 states, and 6.6 million customers worldwide.

MidAmerican officials said that after the deal closes, its assets will exceed $32 billion internationally, of which $25.3 billion are in the United States. In terms of sales, the acquisition would pump up MidAmerican’s annual revenues to $10 billion internationally, of which $8.5 billion will be from the United States. “The energy sector has long interested us, and this is the right fit,” said Buffett, chairman of Berkshire Hathaway, which controls MidAmerican.

Berkshire’s holdings range from See’s Candies to General Re, the insurance giant, as well as several furniture and home furnishings companies.