Investing

Phillips 66 agrees to repurchase shares from Berkshire Hathaway subsidiary

Key Points
  • Phillips 66 said it will buy back shares worth $3.28 billion from a Berkshire Hathaway subsidiary.
  • The transaction could ease regulatory pressure for Berkshire, which is run by Warren Buffett.
  • Phillips 66 will repurchase 35 million shares, bringing Berkshire's stake in Phillips 66 to slightly below 10 percent.
Beck's Phillips station in Princeton, Illinois.
Daniel Acker | Bloomberg | Getty Images

Phillips 66 said it will buy back shares worth $3.28 billion from a Berkshire Hathaway subsidiary, in a transaction that could ease regulatory pressure for Berkshire, the conglomerate run by Warren Buffett.

Phillips 66 will repurchase 35 million shares for $93.725 per share. The buyback will bring Berkshire's stake in Phillips 66 to slightly below 10 percent.

Shares of the refiner closed at $93.76 on Tuesday.

This transaction was solely motivated by our desire to eliminate the regulatory requirements that come with ownership levels above 10 percent," Buffett said in a statement.

Berkshire plans to continue to hold Phillips 66 stock for the long term, Buffett said.

Phillips 66 said in the statement that the transaction, which is expected to close on Wednesday, is expected to immediately add to its earnings per share.

Omaha, Nebraska-based Berkshire ended September with roughly $109 billion of cash and equivalents and is expected to report year-end totals later this month.

The transaction will free up even more money for Buffett to invest.

Berkshire had cited regulatory concerns last April when it withdrew its Federal Reserve application to boost its stake in Wells Fargo, above 10 percent.

Following the buyback, Berkshire will hold 45.7 million Phillips 66 shares, out of a total of 466.5 million shares outstanding, the companies said. Berkshire's holdings will represent a stake of 9.8 percent.