— This is the script of CNBC's news report for China's CCTV on July 6, 2020, Monday.
During the turmoil in the financial markets, Buffett has done little, which has raised some questions. This time, Buffett finally made a move, and it is the natural gas assets of Dominion Energy that Buffett values.
Berkshire Hathaway Energy will buy Dominion Energy's natural-gas transportation and storage business for $4 billion, according to the announcement, adding about $5.7 billion in debt to bring the total deal to about $10 billion. For Berkshire, the most immediate impact of the deal will be to dramatically increase its presence in the U.S. gas business. After the acquisition, the company will be responsible for 18 per cent of the interstate natural gas flow in the US, up from 8 per cent previously.
In May, Buffett said the Fed's rapid actions had made it easier for companies to access liquidity compared to that during the last mortgage crisis, and that is why they had not do anything.
CEO of Berkshire Hathaway
So we have not done anything because we don't see anything that attractive to do. Now, that could change, very quickly or it may not change.
Is acquiring gas asset a wise investment?
For Dominion Energy itself, the overall year-to-date decline is a modest 0.16%, not too bad in this industry.
But on a business basis, U.S. gas futures fell to a 25-year low last month before recovering slightly.
So some believe that Buffet made this move when the market is still at bottom. His investment is further evidence that the energy sector may be undervalued. In addition, yahoo Finance noted that the acquisition also means That Buffett further solidifies energy as the leader in its non-insurance business. And highlighted the work of a key deputy: Abel.
Abel is chairman of Berkshire Hathaway Energy and vice chairman of all non-insurance businesses at Berkshire Hathaway. He also has the more high-profile title of being seen as a potential successor to Buffett.
Buffett's latest investment is the largest single corporate acquisition since the acquisition of Precision Castparts Corp in 2016. Still, the $10 billion investment is a drop in the bucket compared to his $137 billion cash pile, and More of Buffett's investments need to be seen.
Berkshire posted a net loss of nearly $50 billion in the first quarter, its second-quarter earnings are expected to reverse as the stock market recovers, new acquisitions may not be decisive, but they could still bring in hundreds of millions of dollars a year. That's still a positive sign for the company's revenue.
We will also keep a close eye on Buffett's further investments