FOR IMMEDIATE RELEASE
Keith Hartje, Corporate Communications (515) 281-2785
Kevin Waetke, Corporate Communications (515) 281-2785
Jodie Stephens, Investor Relations (515) 281-2204
BERKSHIRE HATHAWAY, WALTER SCOTT AND DAVID SOKOL TO ACQUIRE
MIDAMERICAN ENERGY HOLDINGS; TRANSACTION PRICED AT 29% PREMIUM TO MARKET
DES MOINES, IOWA, October 25, 1999 An investor group including Berkshire
Hathaway, Inc. has reached a definitive agreement to acquire MidAmerican
Energy Holdings Company ("MidAmerican" or the "Company") (NYSE: MEC, PCX
and London) for $35.05 per share in cash which, together with the
assumption of debt, represents a total enterprise value of approximately $9
billion. The per-share purchase price represents a 29% premium over the
closing price of $27.25 on Friday, October 22. The transaction is the
first entry by Berkshire Hathaway into the energy sector, endorsing
MidAmerican's growth strategy as a global energy provider delivering
quality service and value to customers.
Berkshire Hathaway will invest approximately $1.25 billion in common stock
and a non-dividend-paying convertible preferred stock of the surviving
corporation, giving Berkshire about a 75% interest in the Company on a
fully-diluted basis. Berkshire Hathaway will also buy an $800 million
issue of non-transferable trust preferred stock. The other investors, who
in total will invest approximately $300 million, are Walter Scott, the
former chairman of Peter Kiewit Sons' Inc. and MidAmerican's largest
individual shareholder, and certain Scott family interests, and David L.
Sokol, the Chairman and Chief Executive Officer of MidAmerican.
After the completion of the transaction, expected by April of 2000,
MidAmerican will become a privately owned company with publicly traded
fixed-income securities.
MidAmerican's Board of Directors approved the acquisition yesterday.
Speaking on behalf of the Board, Stanley J. Bright, Vice Chairman of the
Board and Chair of a Special Board Committee that negotiated the
transaction, said, "This transaction is the best way to provide value to
shareholders, while also serving the long-term interests of the Company.
It also provides benefits to customers, bondholders, employees and the
communities in which MidAmerican operates."
Mr. Sokol said, "This transaction is beneficial for our shareholders while
at the same time allowing us to make the long-term decisions that are right
for the business in a changing industry. We will be able to focus even
more closely on delivering excellent service and value to customers, and
growth for our communities and employees."
The transaction is subject to MidAmerican shareholder and certain
regulatory approvals. Regulators will continue to oversee the Company's
utility operations.
Aiding regulatory approval, Mr. Sokol added, is the fact that the investor
group owns no other energy interests. Additionally, he said, "With no
financing contingencies, this transaction should provide an attractive
price to shareholders without the time delay and uncertainty inherent in
other potential options."
Mr. Sokol continued, "This transaction represents an endorsement of
MidAmerican by two of the most respected and successful investors in the
world. It provides better access to capital, an expected improvement in
credit quality and association with a long-term investor who allows
management to operate autonomously."
Commenting on the Berkshire Hathaway investment, Warren E. Buffett,
Chairman and Chief Executive Officer of Berkshire Hathaway, said, "We buy
good companies with outstanding management and good growth potential at a
fair price, and we're willing to wait longer than some investors for that
potential to be realized. This investment is right in our sweet spot. If
I only had two draft picks out of American business, Walter Scott and David
Sokol are the ones I would choose for this industry."
Company headquarters will continue to be in Des Moines, Iowa, with the
office of the Chairman and Chief Executive Officer remaining in Omaha,
Nebraska, to focus on strategic planning, mergers and acquisitions and
global development.
Company President Gregory E. Abel said, "No management changes are planned,
no employee reductions will result from the transaction and the Company's
name will stay 'MidAmerican'.
"It will be business as usual, with advantages that did not exist before,"
Mr. Abel said. "We will focus even harder on delivering high-quality
service and the best possible value to customers, using leading-edge
technology. As we prosper, so should our communities. This is a great
deal for all concerned."
MidAmerican Energy Holdings Company, headquartered in Des Moines, Iowa,
USA, has approximately 9,800 employees. Through its retail utility
subsidiaries, MidAmerican Energy in the U.S. and Northern Electric in the
U.K., the Company provides electric service to 2.2 million customers and
natural gas service to 1.2 million customers worldwide. The Company
manages and owns interests in approximately 8,300 net megawatts of
diversified power generation facilities in operation, construction and
development. Information about MidAmerican and its three principal
subsidiary companies is available on the Internet at
http://www.midamerican.com.
Berkshire Hathaway and its subsidiaries engage in a number of diverse
business activities among which the most important is the property and
casualty insurance business conducted on both a direct and reinsurance
basis. Common stock of the company is listed on the New York Stock
Exchange, trading symbols BRK.A and BRK.B.
Lehman Brothers, Inc. advised, and Lehman Brothers, Inc. and Warburg Dillon
Read provided fairness opinions to, the MidAmerican Board. Credit Suisse
First Boston advised David Sokol in connection with the transaction, and
was retained by Teton Acquisition Corp., the special-purpose acquisition
vehicle for the transaction.
Certain information included in this release contains forward-looking
statements made pursuant to the Private Securities Litigation Reform Act of
1995 ("Reform Act"). Such statements are based on current expectations and
involve a number of known and unknown risks and uncertainties that could
cause the actual results and performance of the Company to differ
materially from any expected future results or performance, expressed or
implied, by the forward-looking statements. In connection with the safe
harbor provisions of the Reform Act, the Company has identified important
factors that could cause actual results to differ materially from such
expectations, including development uncertainty, operating uncertainty,
acquisition uncertainty, uncertainties relating to doing business outside
of the United States, uncertainties relating to geothermal resources,
uncertainties relating to domestic and international (and in particular
Indonesian) economic and political conditions and uncertainties regarding
the impact of regulations, changes in government policy, industry
deregulation and competition. Reference is made to all of the Company's
SEC filings, including the Company's Report on Form 8-K dated March 26,
1999, incorporated herein by reference, for a description of such factors.
The Company assumes no responsibility to update forward-looking information
contained herein.
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