By Jonathan Stempel
(Reuters) -Berkshire Hathaway will take full ownership of Berkshire Hathaway Energy, after the unit of Warren Buffett's conglomerate agreed to pay $3.1 billion in cash and stock for the 8% stake owned by the family of late billionaire philanthropist Walter Scott.
According to a Tuesday regulatory filing, Berkshire Hathaway Energy will acquire 4.42 million shares of its voting common stock and a $100 million bond maturing in 2057.
In exchange, Berkshire will pay $2.37 billion in cash, and give Scott's family 1.6 million Class B shares worth about $737 million as of Monday's close. It will also issue a $600 million, one-year note.
Berkshire Hathaway Energy expects to complete the transaction after regulatory approvals in the current quarter.
It said Omaha, Nebraska-based Berkshire will thereafter own 100% of its voting common stock, up from 92% now.
Neither Berkshire Hathaway nor Berkshire Hathaway Energy immediately responded to requests for comment.
Scott, an Omaha native, was a longtime Berkshire director and Buffett friend who died in Sept. 2021 at age 90.
Analysts long expected Berkshire to buy out Scott's family, though the purchase price is lower than some forecast.
It is unusual for Berkshire to fund a transaction with its own stock, which trades near its record high.
"I thought the price would be higher," said James Shanahan, an analyst at Edward Jones. "It seems the Scott estate left a fair amount of money on the table."
In June 2022, Berkshire Vice Chairman Greg Abel, who led Berkshire Hathaway Energy for a decade, sold his 1% stake to Berkshire for $870 million. That suggested that the Scott family's stake was worth nearly $7 billion.
But the energy unit's PacifiCorp utility has since faced many lawsuits by homeowners and business owners who blame it for causing wildfires in Oregon and northern California in 2020.
The purchase also lets Berkshire spend some of its cash, which totaled $276.9 billion as of June 30.
"It makes sense," said Cathy Seifert, an analyst at CFRA Research. "Berkshire has a significant pile of cash to deploy, at a time U.S. Treasury yields are falling and likely to continue to fall."
She said the energy business nonetheless "has had its fair amount of challenges since Abel sold his stake, not the least of which is the wildfire litigation."
Berkshire Hathaway Energy owns energy, utility and pipeline operations, and one of the largest U.S. residential real estate brokerages.
Buffett's conglomerate originally bought a 76% stake in 2000, when the unit was known as MidAmerican Energy. The unit adopted the Berkshire Hathaway Energy name in 2014.
Abel, 62, is expected to eventually succeed Buffett, 94, as Berkshire's chief executive.
(Reporting by Jonathan Stempel in New YorkEditing by Nick Zieminski)