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NV Energy is Nevada’s main electric and gas provider with about 1.3 million customers who are always looking to beat the heat. They beat the price rate heat scheduled for January after Warren Buffet announced “MidAmerican Energy Holdings, a unit of Mr. Buffett’s Berkshire Hathaway, agreed to buy Nevada’s largest electric utility, NV Energy, for about $5.6 billion,” according to a report by New York Times Deal. The purchase will make MidAmerican Energy Holdings “the largest U.S. utility owner with 8.4 million customers,” according to a Bloomberg report. The Cost According to the Bloomberg report, Buffet’s company will pay “pay $23.75 a share,” an amount that places the total around $5.6 billion. After the deal is said and done, Bloomberg estimates that MidAmerican will have about “$66 billion… expected in the first quarter of next year.” MidAmerican’s CEO stated that the company is investing in “quality assets” and looks forward to investing in Nevada and its economy. According Bloomberg, “Buffett, 82, has said that businesses like utilities have earnings power even under adverse economic conditions and can provide fair returns on capital as long as they make investments in infrastructure to meet customer needs.” Assets aside, the Deal Book article also asserted that MidAmerican will be picking up NV Energy’s debts—“about $4.5 billion in debt.” Still, many experts believe this is a good prospect for MidAmerican. OilPrice.com reported on Buffet’s comments when he stated “It’s a long-term investment in the state of Nevada…and a good buy because it is, after all, a monopoly—one that earned $330 million over the past 12 months”. OilPrice.com also reported that “Nevada’s officials are breaking out the champagne with the news that investor extraordinaire Warren Buffett is acquiring the state’s electric monopoly. NV Energy is a provider of both electric and gas and their history of operating in the state stretches back to a founding parent company of the 1850s. MidAmerican Expands Footprint Once the deal is final, this will be MidAmerican’s largest acquisition allowing it to expand “its footprint in the energy sector,” according to USA Today. The article continues by reporting that “MidAmerican has been aggressively investing in renewable energy projects in recent years, and the companies expect that MidAmerican's experience will help NV Energy develop renewable projects in Nevada, which has vast solar, wind and geothermal resources.” Electric and Gas Suppliers Look to Consolidate Teaming up may be a decided trend for energy providers in this evolving energy age. USA Today reports that utility companies have begun to consolidate “in the face of weak electric demand and rising costs, related to upgrading aging infrastructure and making power generation cleaner to meet tighter environmental regulations.” The goal, of course, is to reduce the amount of borrowing and increase profitability. When Will the Deal Close? USA Today reported that “MidAmerican and NV Energy say both companies' boards have approved the sale and they expect it to close in the first quarter of 2014, subject to approval by regulators and NV Energy shareholders.” Eyes are peeled to the sealing of this deal that many are in favor of. According to the Las Vegas Review-Journal, “Few business leaders are as admired as Buffett, and his decision to invest here puts Nevada’s corporate world on the map”. Particulars Additionally, reports suggest that NV Energy’s management will be sticking around as Buffet has suggested. As the Las Vegas Review-Journal reported, “Anytime we get someone like Warren Buffett to acquire a Nevada company and not get rid of management, it raises the level of perceived sophistication that there are well-managed companies here.” Of course, as the Global Dispatch reported, “Not everyone was thrilled with the news when it broke. Investors buy companies to make money, not necessarily to benefit customers” and Buffet has a reputation as a friend to the masses in spite of his Midas touch when it comes to business. Perhaps, of course, the deal will wind up being profitable as Buffet doesn’t make a habit of investing in sinking ships. Nevada’s economy has been struggling, but few haven’t. His investment in the state demonstrates his belief in their economy and for many Nevadans, that’s a real good sign. Laura Ginn understands the need to keep searching for new sources of renewable energy to provide us with our domestic electric and gas. Using uSwitch.com she knows that she can find the cheapest gas and electricity tariff in her area.
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