Berkshire Hathaway’s shares have hit an all-time high despite the company’ failure to secure a $9 billion deal for Texas power transmission company Oncor.
The company had been at risk of a credit rating downgrade, but Berkshire Hathaway’s shares shot up after S&P Global Ratings affirmed its AA rating, CNBC noted.
Berkshire A shares rose to an all-time high of $270,960 while B shares hit a record-breaking $180.61 for the company on Tuesday.
Berkshire Hathaway’s Warren Buffet aimed to add bankrupt Energy Future Holdings' Oncor power transmission operations to his company’s energy portfolio.
This led to the rating agency putting Berkshire under review for a credit downgrade amid concerns that incorporating Oncor to the company’s portfolio could affect leverage.
However, in a turn of events over the weekend, Sempra Energy swooped in and foiled Buffet’s plans by striking a $9.45 billion deal for Oncor.
As a result, this elevated Berkshire’s financial status.
Barclays Capital analyst Jay Gelb said that, by losing out on the deal for Oncor, Berkshire was left with "about $80 billion of cash for acquisitions, while leaving Buffett the cushion he wants for such things as payouts by Berkshire insurance units," CNBC reported.
S&P said they had placed the company on "CreditWatch negative following the Oncor acquisition announcement to reflect the uncertainty around the funding of the acquisition and how it could affect leverage metrics at the parent-company level," the Financial Times reported.
However, S&P said that "with the transaction now terminated, we expect the company’s current leverage to remain within our original expectations."
Greg Abel, the chairman of the Berkshire unit, told CNBC that they were disappointed about their failure to clinch the deal with Oncor, adding that they were "extremely grateful for the strong support and extraordinary backing from all of the stakeholders in Texas."
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