Buffet

Buffett's MidAmerican to Buy PacifiCorp for $5.1 Bln (Update5)

By Elena Moya - May 24, 2005 07:29 EDT

May 24 (Bloomberg) -- MidAmerican Energy Holdings Co., a utility controlled by Warren Buffett's Berkshire Hathaway Inc., agreed to buy PacifiCorp for $5.1 billion in cash, gaining the largest provider of power in the U.S. Northwest.

MidAmerican is buying PacifiCorp from Scottish Power Plc, which booked costs of 927 million pounds ($1.7 billion) tied to the sale, the Glasgow-based company said today in a statement. MidAmerican of Des Moines, Iowa, will assume $4.3 billion of debt, valuing the transaction at $9.4 billion.

The acquisition, Buffett's biggest since his 1998 takeover of General Re Corp., gives MidAmerican 1.6 million customers in six states spreading from Oregon to Utah and creates an energy company with annual revenue of $10 billion. Buffett, America's second-richest person, told investors on May 1 that he's looking for ways to invest Berkshire Hathaway's $44 billion of cash.

``The energy sector has long interested us, and this is the right fit,'' Buffett, 74, said in a statement. Scottish Power shares rose as much as 8.5 percent after the company said it plans to return $4.5 billion from the sale to shareholders.

The acquisition of Portland, Oregon-based PacifiCorp will help MidAmerican expand in neighboring states and more than double its number of U.S. customers to about 3 million. The purchase will increase its power-generating capacity to 16,000 megawatts, enough to light about 6 million homes, from 9,000 megawatts now.

A group led by Berkshire Hathaway bought MidAmerican in March 2000 for $9 billion, including $7 billion of assumed debt. Berkshire controls more than 80 percent of the company.

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