Scottish Power Analysis

In May 2005, Scottish Power announced that it had agreed to sell PacifiCorp to MidAmerican Energy Holdings Company, a company controlled by Warren Buffett's company, Berkshire Hathaway, for US$5.1 billion in cash and US$4.3 billion in debt and preferred stock. ( Investopedia. 2010). The deal, which marks Berkshire's biggest acquisition since 1998, will create an energy holding company serving three million electric and natural-gas customers in 10 states and 6.6 million customers world-wide.

Year Per-Share Investments

1985 ..................................................................... 2,407

1995 ..................................................................... 21,817

2005 ..................................................................... $74,129

Compound Growth Rate 1995-2005.................... 13.0%

Year Per-Share Earnings

1985 ..................................................................... 52

1995 ..................................................................... 175

2005 ..................................................................... $2,441

Compound Growth Rate 1995-2005.................... 30.2%

From the figure, we could significantly see on the announcement day of the acquisition by Scottish Power plc, the share price of Berkshire Hathaway has increased rapidly. The share price in 24 May 2005 for Berkshire Hathaway is 85500 European currencies and this is the highest price point in May. Following the acquisition, Berkshire Hathaway will have $10 billion in annual revenue, of which $8.5 billion will be from the U.S. It will own, operate and have under construction or in advanced development more than 16,000 megawatts of electric generation in the U.S. ( Berkshire Hathaway 2005 Annual Report). Above reasons make the share price of Berkshire Hathaway continuous rising on announcement day.

Corresponds to the share price of Berkshire Hathaway go up, share price for Scottish Power also rise clearly. It achieve at...