Category: Acquisitions

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Acquisitions Berkshire Hathaway Energy

Berkshire Hathaway to Take Over Major Stake in North Sea Gas Project

(BRK.A), (BRK.B)

Berkshire Hathaway looks to be one of the beneficiaries of the withdrawal of Dana Petroleum from a major North Sea gas project called Platypus.

The Playtpus project has been estimated to have mid-case recoverable reserves of 105 billion cubic feet of natural gas.

Currently, CalEnergy Resources, a subsidiary of Berkshire Hathaway Energy, has a 26% stake in the project, and Parkmead Group has a 15% stake. Both companies would assume Dana’s interest, with Parkmead Group taking over the role of operator from Dana.

Dana Petroleum is a wholly-owned subsidiary of Korea National Oil Corporation.

Berkshire Hathaway recently increased its natural gas distribution holdings in the U.S. with its acquisition of Dominion Energy’s natural gas transmission and storage business.

CalEnergy, and its predecessor companies, have been active in oil and gas since the 1970s, and engages in exploration through appraisal, development, production and pipeline operations.

© 2021 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

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Acquisitions Berkadia

Berkadia Acquires Moran & Company

(BRK.A), (BRK.B)

Berkadia, Berkshire Hathaway’s joint venture with Jefferies Financial Group, has acquired the apartment brokerage practice of Moran & Company, expanding Berkadia’s core capabilities to include an enhanced focus on institutional investment sales.

The partnership will launch Berkadia Institutional Solutions, powered by Moran, a platform dedicated to serving institutional investors nationally through Berkadia’s robust suite of services and resources combined with Moran’s strong institutional investor relationships, built on trust, client service and collaboration.

“This is a tremendous day not just for the Berkadia and Moran teams, but most importantly for our clients—the primary focus in everything we do,” said Berkadia CEO Justin Wheeler. “We remain optimistic about the future of multifamily and are committed to building the most robust CRE platform in the country, powered by the best talent in our industry. There’s no team more experienced or respected in the institutional sales space than Moran.

Together, we will transform apartment institutional investment sales nationally, offering our clients industry leading advice, resources and support to create new opportunities and better outcomes for long-term success.”

Moran Co-Chairman Mary Ann King will be joining Berkadia as Co-Head of Investment Sales and Head of Berkadia Institutional Solutions, powered by Moran, working together with Keith Misner, SVP and now Co-Head of Investments Sales, to lead the integration of the entire 31-member Moran team, including 15 dedicated institutional sales advisors, into Berkadia.

The commercial real estate industry has witnessed record-breaking private real estate equity fundraising in the past few years, with $83 billion raised in 2019 and $23 billion through June 2020 according to Preqin. The sector continues to gain favor with investors as it provides an opportunity to hedge risk and enhance portfolio diversification. Multifamily real estate in particular has demonstrated impressive resilience, coupled with long-term income growth and liquidity characteristics, generating attractive risk-adjusted returns over the past 25 years according to the NCREIF Property Index (NPI).

Moran’s 25-year legacy in multifamily investment sales, with a specialized focus on institutional investors, will complement Berkadia’s existing investment sales, mortgage banking and servicing platforms, delivering greater access to fully integrated commercial real estate solutions.

“At Moran, we’re incredibly proud of our legacy, but always thinking ahead to how we can better anticipate—and answer—our clients’ long-term needs. In joining Berkadia, we’re doing just that,” said Thomas F. Moran, Founder and Co-Chairman of Moran & Company. “Like us, Berkadia is privately-owned and shares our client-centric and collaborative mindset, our focus on people, and our commitment to integrity and excellence.”

“Moran’s team culture and client-focused approach has enabled us to build one of the best apartment institutional sales platforms in the business,” said King. “Now, as Berkadia Institutional Solutions, powered by Moran, we’ll truly be a fully integrated platform with a national presence for our clients, providing them with actionable insights, industry expertise and technology, supported by a full suite of capital markets resources, to maximize their long-term success. We’re energized and excited to move forward together at Berkadia and execute our shared vision for the future.”

In the past two years, Berkadia has executed several other strategic acquisitions aimed at broadening the firm’s depth of expertise and enhancing the firm’s comprehensive offerings, including the:

• Acquisition of Central Park Capital Partners, which launched Berkadia’s Joint Venture Equity & Structured Capital Group;

• Addition of a tax credit syndication and advisory platform with the integration of Riverside Capital into Berkadia Affordable; and

• Acquisition of LIHTC Advisors, a brokerage firm dedicated to providing full-service solutions for apartment investors and focusing on Low Income Housing Tax Credit (LIHTC) and other affordable housing properties.

Additionally, the organization has attracted elite talent across the country, including New York City, Boston, Chicago, Houston, Philadelphia, Dallas, Seattle, Indianapolis, Denver, St. Louis, Southern California, Orlando, Richmond and Birmingham, and within specialty categories, such as Affordable Housing, Hotels & Hospitality, HUD and Student Housing.

Berkshire and Berkadia

Founded in 2009 as a 50/50 joint venture between Berkshire Hathaway and Leucadia National Corporation (now known as Jefferies Financial Group), Berkadia is a third-party commercial mortgage servicer, as well as an approved lender for Fannie Mae, Freddie Mac, and HUD/FHA.

The company is among the top Freddie Mac and Fannie Mae multifamily lenders.

Berkadia owes its origins to GMAC Commercial Mortgage Corporation, which was acquired in 2009 by Kohlberg Kravis Roberts & Co., Five Mile Capital Partners LLC, and Goldman Sachs Capital Partners. Christened Capmark Financial, the company had $10 billion of originations in 2008 and a servicing portfolio of more than $360 billion before running into bankruptcy in October 2009.

In a deal approved by the bankruptcy court, Capmark sold its mortgage loan and servicing to the newly formed Berkadia in a deal worth $515 million.

The deal brought Berkshire into the heart of the commercial loan serving business, and the company has one of the largest commercial real estate servicing portfolios.

© 2021 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Categories
Acquisitions Benjamin Moore

Benjamin Moore Acquires UK-Based Shaw Paints

(BRK.A), (BRK.B)

Something that Warren Buffett is always fond of are bolt-on acquisitions that bolster Berkshire Hathaway’s existing companies. To that end, Benjamin Moore & Co. has acquired its United Kingdom distribution partner, Shaw Paints Ltd.

Prior to this transaction, Shaw Paints Ltd was the exclusive UK distributor of Benjamin Moore premium quality products and expansive color offerings to consumers, designers and professionals alike. Effective immediately, industry veterans and Shaw Paints co-founders, Craig and Helen Shaw, will join the Benjamin Moore team and remain based in the UK.

With this acquisition, Shaw Paints Ltd will become Benjamin Moore UK, in an effort to accelerate the brand’s growth in the United Kingdom.

The newly formed Benjamin Moore UK will continue to operate showrooms in Slough, Chelsea and Wilmslow, as well as fulfillment to a network of authorized stockists throughout the market.

“We’re thrilled to formally incorporate Shaw Paints Ltd into our international sales operations as they’ve been a trusted partner these past five years,” said Dan Calkins, Benjamin Moore Chairman & CEO. “With their sterling track record, this will enable Benjamin Moore to increase scale throughout the region and offer our best-in-class products to more UK customers.”

“The Benjamin Moore brand has been exceptionally well received in the UK market since the launch in 2015 and we have experienced strong growth as a result of our strategic partnership with Benjamin Moore,” said Craig Shaw, Shaw Paints Ltd Co-Founder. “We’re proud of the business we operate in the United Kingdom and through this acquisition, we expect to further accelerate growth with our industry-leading products and unparalleled color offerings.”

© 2020 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Categories
Acquisitions Berkshire Hathaway Energy

Berkshire Hathaway Energy Completes Acquisition of Majority of Dominion Energy’s Gas Transmission and Storage Business

(BRK.A), (BRK.B)

Berkshire Hathaway Energy has completed the purchase of Dominion Energy’s natural gas transmission and storage business, exclusive of Questar Pipeline Group.

The transaction consideration was $8 billion, including approximately $2.7 billion in cash (subject to certain adjustments) and the assumption of approximately $5.3 billion in debt.

The completed transaction also included the acquisition of 25% of Cove Point LNG – an LNG export, import and storage facility in Maryland that Berkshire Hathaway Energy will now operate. The transaction received antitrust clearance under the Hart-Scott-Rodino Act from the Federal Trade Commission in October 2020, and approval to transfer existing licenses from the Federal Communications Commission and Department of Energy earlier this year.

“We are pleased to welcome the natural gas transmission and storage business and its employees to Berkshire Hathaway Energy,” said Greg Abel, Berkshire Hathaway’s vice chairman, non-insurance operations, and Berkshire Hathaway Energy chairman. “With shared values and priorities, the business is a great fit within our organization and will play an important role in our long-term plan to deliver clean, low-cost and sustainable energy solutions to customers and communities.”

On July 5, 2020, Berkshire Hathaway Energy announced it had reached an agreement to acquire substantially all of Dominion Energy’s gas transmission and storage operating segment assets. On September 30, 2020, Dominion Energy announced a dual-phase closing for the transaction as a result of updated timing expectations for receipt of the antitrust clearance from the Federal Trade Commission related exclusively to the sale of Questar Pipeline Group.

On October 5, 2020, the companies entered into a second agreement providing for Berkshire Hathaway Energy’s purchase of Questar Pipeline Group from Dominion Energy Questar Corporation. The second transaction is subject to regulatory approvals and is expected to close in early 2021.

© 2020 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Categories
Acquisitions Marmon Group

Berkshire Hathaway Acquires Tenn-Tex Plastics

(BRK.A), (BRK.B)

Berkshire Hathaway’s Marmon Fastener Group has announced the acquisition of Tenn-Tex Plastics Inc., adding it to its lineup of construction fastener companies. No financial terms of the deal were released.

Based in Colfax, North Carolina, Tenn-Tex manufactures plastic injection molded parts for kitchen and bath cabinetry.

The company’s products include: speciality drawer slide brackets designed for easy installation, a patented QuikTray Rollout System, Shelf Clips, Shelf Supports, Institutional Shelf Supports, Corner Braces, Glue Blocks, False Front Clips, Glass Door Retainers, Slide Brackets for Undermount and Side Mount Slides, Brackets for Ball Bearing Slides, Cover Caps, Shipping Clips, Spacers, Inset brackets, Toe Kick Endcaps, Paint Caps, Furniture Glides and much more.

“Tenn-Tex is a great fit for the Marmon Fastener Group as we grow and innovate in both existing and adjacent markets to meet customer needs,” said Group President Steve Semmler. “Tenn-Tex is particularly well aligned with Pan American Screw.”

“We look forward to growing in service to our customers and markets through the excellent synergy of Pan American / Deerwood Fasteners and Tenn-Tex,” said Pan American President Phil Lail.

© 2020 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Categories
Acquisitions Berkadia

Berkadia Acquires LIHTC Advisors Brokerage

(BRK.A), (BRK.B)

Berkadia, Berkshire Hathaway’s joint venture with Jefferies Financial Group, has acquired LIHTC Advisors, an Idaho-based brokerage firm dedicated to providing full-service solutions for apartment investors and focusing on Low Income Housing Tax Credit (LIHTC) and other affordable housing properties.

Leading this team will be Jeff Irish and Brandon Grisham, former principals with LIHTC Advisors who, prior to joining Berkadia, have been involved in the sale of over $2 billion of affordable housing assets throughout the country.

The addition of LIHTC Advisors will broaden Berkadia Affordable’s market presence and support long-term strategic growth under the leadership of David Leopold, SVP and Head of Berkadia Affordable.

Irish and Grisham have been in the affordable housing brokerage business for a combined 19 years representing both general and limited partners. In 2019, they closed 53 transactions—and expect to exceed that in 2020.

“This is a huge step forward in Berkadia’s goal of expanding our affordable housing team, another investment in this critical space,” said Berkadia CEO Justin Wheeler. “Jeff, Brandon and their team bring a long and successful record of providing excellent advisory and client service—what Berkadia is known for in this asset class and in our industry.”

This investment advances Berkadia’s strategic growth initiative in the affordable business. David Leopold joined as SVP and Head of Berkadia Affordable in 2019. Leopold leads the strategy of Berkadia Affordable’s Mortgage Banking, Investment Sales and recently integrated Tax Credit Syndication teams, which together deliver comprehensive capital and advisory services to support the growth of Berkadia’s affordable housing clients.

“We are thrilled to be adding such skilled affordable experts to further our goal to be the largest and most respected provider of capital and advisory services for affordable housing in the country,” said Leopold. “Jeff, Brandon and their entire team bring our suite of services and market presence to a new level, partnering with our clients to maximize the value and impact of their investments.”

“Joining the Berkadia team was an easy choice—our values of hard work, integrity and passion align with theirs, along with the promise to deliver exceptional client service,” said Grisham. Joining Irish and Grisham on the move is a team of brokers and technical experts dedicated to providing best in class analysis, marketing and sales execution.

In 2019, Berkadia’s loan origination volume was $27 billion, while its investment sales platform totaled $9 billion.

About Berkadia

Founded in 2009 as a 50/50 joint venture between Berkshire Hathaway and Leucadia National Corporation (now known as Jefferies Financial Group), Berkadia is a third-party commercial mortgage servicer, as well as an approved lender for Fannie Mae, Freddie Mac, and HUD/FHA.

The company is among the top Freddie Mac and Fannie Mae multifamily lenders.

Berkadia owes its origins to GMAC Commercial Mortgage Corporation, which was acquired in 2009 by Kohlberg Kravis Roberts & Co., Five Mile Capital Partners LLC, and Goldman Sachs Capital Partners. Christened Capmark Financial, the company had $10 billion of originations in 2008 and a servicing portfolio of more than $360 billion before running into bankruptcy in October 2009.

In a deal approved by the bankruptcy court, Capmark sold its mortgage loan and servicing to the newly formed Berkadia in a deal worth $515 million.

The deal brought Berkshire into the heart of the commercial loan serving business, and the company has one of the largest commercial real estate servicing portfolios.

© 2020 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Categories
Acquisitions Lubrizol

Berkshire’s Lubrizol Acquires 3D Printing Company, Avid Product Development

(BRK.A), (BRK.B)

Berkshire Hathaway’s The Lubrizol Corporation has acquired Avid Product Development, LLC, a trusted partner for engineering and additive manufacturing services.

No price for the acquisition was revealed.

According to Lubrizol, Avid offers a unique blend of 3D printing capabilities, including design for additive manufacturing (DfAM), prototyping and production using powder bed fusion (MJF, SLS), fused filament fabrication (FFF) and stereolithography (SLA), with expertise in various post-processing technologies.

The company note that the 3D printing industry continues to rapidly grow, creating an immense opportunity for companies leveraging 3D printing services as part of their portfolios. Today, OEMs (original equipment manufacturers) interested in 3D printing are seeking partners who can assist in their efforts to integrate this new technology into their processes. Lubrizol’s materials, application and testing expertise coupled with Avid’s 3D printing design, prototyping and post-processing know-how will enable development of differentiated solutions for customers and accelerate adoption of 3D printing in key industries.

“Lubrizol continues to invest in opportunities that bring new differentiated solutions to our customers,” says Gert-Jan Nijhuis, General Manager, 3D Printing Solutions, Lubrizol Engineered Materials. “The acquisition of Avid Product Development greatly enhances our ability as a 3D printing solution provider, offering complete product solutions from material development to printing and post processing services, delivering end-use products for our key markets.”

“As a result of this acquisition, we will have vast opportunities to demonstrate our capabilities in engineering, design and manufacturing with the support of an industry leader in materials development, applications and testing” added Doug Collins, founder of Avid Product Development.

Avid is headquartered in Loveland, Colorado and serves customers in the footwear, consumer goods, industrial and medical markets. Avid won the 2019 Colorado Company to Watch award, and continues to create innovative solutions, including designing and 3D printing of critical personal protection equipment (PPE) to meet the urgent needs of healthcare workers and essential businesses during the COVID-19 pandemic.

© 2020 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Categories
Acquisitions Berkshire Hathaway Energy Commentary Warren Buffett

Commentary: Buffett Casts His Vote with Dominion Energy Assets Acquisition

(BRK.A), (BRK.B)

With Berkshire Hathaway’s $9.7 billion agreement to acquire Dominion Energy’s natural gas transmission and storage business, Warren Buffett has engaged in a strategy that is familiar to Buffet watchers—the choice between owning a part of a company through equities, or the acquisition of whole companies. It’s a choice that Buffett that has made for almost six decades based on which valuation he judges to be cheaper.

At this year’s annual meeting, Buffett revealed that he had bought relatively few stocks at a time when the market’s plunge had many seeing a rare buying opportunity. Buffett thought differently, and his sale of Berkshire’s entire commercial airline portfolio due to what he felt would be long term profitability issues for United, Delta, American, and Southwest, reflected that perspective.

Now, Buffett has found something he likes. It is an acquisition that makes Berkshire Hathaway a giant in natural gas distribution, vaulting it from carrying 8% of the nation’s natural gas to 18%.

The acquisition adds to one of Berkshire’s core businesses, Berkshire Hathaway Energy, which will acquire 100% of Dominion Energy Transmission, Questar Pipeline and Carolina Gas Transmission; and 50% of Iroquois Gas Transmission System. Additionally, Berkshire will acquire 25% of Cove Point LNG – an LNG export, import and storage facility in Maryland.

The acquisition includes over 7,700 miles of natural gas transmission lines, with approximately 20.8 billion cubic feet per day of transportation capacity and 900 billion cubic feet of operated natural gas storage with 364 billion cubic feet of company-owned working storage capacity, and partial ownership of a liquefied natural gas export, import and storage facility.

Demand for natural gas has risen from 4,917,152 million cubic feet in 1949 to 31,014,345 million cubic feet in 2019, according to the U.S. Energy Information Administration. And with the retirement of more and more coal-fired generating plants, natural gas is a key replacement. Even with the enormous growth of wind and solar, new gas-fired plants are being constructed as backup generation for when the winds are calm and the skies are cloudy.

By making this acquisition, Buffett adds key assets to Berkshire Hathaway Energy that will guarantee a pay-off not just in the short term, but for decades to come. And that’s exactly what Buffet likes, putting money to work for decades to come.

This is not to say that Buffett won’t return to buying equities, but for now, he has voted with his dollars that the better deal in the near term is the acquisition of a whole company.

© 2020 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell a stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Categories
Acquisitions Berkshire Hathaway Energy Warren Buffett

Warren Buffett Nabs Natural Gas Assets from Dominion Energy

(BRK.A), (BRK.B)

Warren Buffett has finally used his famed “elephant gun” on a key addition to Berkshire Hathaway Energy.

Berkshire Hathaway Energy has executed a definitive agreement to acquire Dominion Energy’s natural gas transmission and storage business.

The assets include over 7,700 miles of natural gas transmission lines, with approximately 20.8 billion cubic feet per day of transportation capacity and 900 billion cubic feet of operated natural gas storage with 364 billion cubic feet of company-owned working storage capacity, and partial ownership of a liquefied natural gas export, import and storage facility.

The transaction has an enterprise value of approximately $9.7 billion.

“I admire Tom Farrell for his exceptional leadership across the energy industry as well as within Dominion Energy,” said Warren Buffett, chairman of Berkshire Hathaway. “We are very proud to be adding such a great portfolio of natural gas assets to our already strong energy business.”

As part of the transaction, Berkshire Hathaway Energy will acquire 100% of Dominion Energy Transmission, Questar Pipeline and Carolina Gas Transmission; and 50% of Iroquois Gas Transmission System.

The agreement does not include acquisition of the Atlantic Coast Pipeline.

Additionally, the company will acquire 25% of Cove Point LNG – an LNG export, import and storage facility in Maryland. Dominion Energy will continue to own 50% of Cove Point, with Brookfield Asset Management continuing to own the remaining 25% share. Berkshire Hathaway Energy will operate the Cove Point facility once the transaction closes.

The Cove Point export terminal is one of only six LNG export facilities in the U.S.

“This premier natural gas transmission and storage business has been operated and managed in a best-in-class manner,” said Bill Fehrman, Berkshire Hathaway Energy’s president and CEO. “Acquiring this portfolio of natural gas assets considerably expands our company’s footprint in several Eastern and Western states as well as globally, increasing the market reach and diversity of Berkshire Hathaway Energy.”

“We are honored to be gaining a wonderful group of employees with a wealth of experience that will continue to provide high-quality service for our customers and partners. We look forward to welcoming them to the team,” said Greg Abel, Berkshire Hathaway’s vice chairman, non-insurance operations, and Berkshire Hathaway Energy chairman.

“We are fortunate Dominion Energy has entrusted us to preserve and build upon such a remarkable business that will allow Berkshire Hathaway Energy to add $9.7 billion in asset value to the portfolio that currently exceeds $100 billion.”

© 2020 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Categories
Acquisitions Forest River

Forest River Acquires REV’s Shuttle Bus Brands

(BRK.A), (BRK.B)

Berkshire Hathaway’s Forest River Inc. has acquired REV Group’s shuttle bus brands: Champion Bus, Federal Coach, World Trans, Krystal Coach, ElDorado and Goshen Coach, adding to the company’s current shuttle bus divisions.

The brands are currently produced at plants in Salina and Imlay City, Michigan.

The bus product line provides transportation for colleges, churches, assisted living facilities, retirement communities, transportation companies and government agencies.

In a press release, David Wright, president of the bus division at Forest River said “We are excited to welcome Champion Bus and ElDorado to Forest River. Both organizations have built a history of integrity, quality and innovation and enjoy an excellent reputation in our industry today. As we navigate these challenging times, the addition of these historic and iconic brands to the Forest River family enhance our ability to provide products and a customer experience that is second to none. We look forward to working with our dealer partners as we better position Forest River’s shuttle bus divisions for the future.”

© 2020 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway and BYD, and this article is not a recommendation on whether to buy or sell a stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.