Berkshire CEO-elect Abel is selling his stake in the energy company he ran for $870 million

Gregory Abel, CEO of Berkshire Hathaway Energy and who is slated to succeed Warren Buffett as CEO of Berkshire, walks through the crowd at Berkshire Hathaway Inc’s first in-person annual meeting since 2019 in Omaha, Nebraska, USA, April 29, 2022. REUTERS/Scott Morgan

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Aug 6 (Reuters) – Berkshire Hathaway Inc (BRKa.N) said on Saturday that Vice Chairman Greg Abel, who is next to succeed billionaire Warren Buffett as chief executive, has sold his 1% stake in the company’s Berkshire Hathaway Energy unit for $870 million.

In its quarterly report, Berkshire said the energy unit acquired Abel in June as part of a deal between them and the family of late billionaire philanthropist Walter Scott, who own an 8% stake.

Buffett’s Omaha, Nebraska-based conglomerate took a $362 million capital charge, reflecting the premium to stake value reflected on its books.

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Berkshire now owns 92% of Berkshire Hathaway Energy, whose businesses include energy, utility and pipeline operations and a major US real estate brokerage firm.

Scott, originally from Omaha, was a longtime Berkshire manager and friend of Buffett, who died last September at the age of 90.

The sale of Abel suggests the Scott family stake could be worth $7 billion. Berkshire ended June with more than $105 billion in cash.

“I suspect that if Abel sells, Walter Scott’s estate could also be liquidated,” said Edward Jones & Co. analyst James Shanahan.

CFRA Research analyst Cathy Seifert added, “It was a little surprising that there hadn’t been a prior regulatory filing for such a large transaction.”

Shanahan and Seifert cover Berkshire.

Scott’s family could not immediately be reached for comment. Berkshire Hathaway Energy did not immediately respond to a request for comment.

Abel, 60, a hockey fan who grew up in Edmonton, Alta., joined Berkshire Hathaway Energy, then known as MidAmerican Energy, in 1992, eight years before Berkshire took over.

He became the head of MidAmerican in 2008 and the vice chairman of Berkshire overseeing its dozens of non-insurance businesses in 2018.

Buffett turns 92 on August 30. He said in May 2021 that if he stepped down, Abel would become Berkshire’s chief executive.

Abel and Ajit Jain, Berkshire’s vice president overseeing its insurance business, have each received $19 million in each of the past three years. Buffett sets their compensation. Read more

Shanahan said Abel’s sale “makes me wonder if he’ll buy Berkshire stock. He doesn’t own a lot and could use the proceeds to get more skin in the game.”

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Reporting by Jonathan Stempel in New York; Additional reporting by Maria Ponnezhath in Bengaluru; edited by Diane Craft

Our standards: The Thomson Reuters Trust Principles.

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