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Author: DrtThrwingMonkey Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 214567  
Subject: Re: MidAmerican Minority Interests Date: 3/7/2013 4:49 PM
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Walter Scott is one of the signatories of the Giving Pledge meaning that he has pledged at least half of his net worth to philanthropy. Therefore, at some point it is likely that his interest in MidAmerican will have to be at least partially liquidated to facilitate those gifts.

Buffett and Scott are approximately the same age. It would not surprise me to see Berkshire acquire the remaining minority interests in MidAmerican to facilitate Scott's estate planning situation. However, my guess is that Berkshire would have to pay with stock to make this tax efficient.



The Giving Pledge does not involve a commitment to give one's wealth during one's lifetime, so it may be some years before the Scott estate has to decide what to do with MidAmerican shares. One option would be to donate the shares, which could then be purchased by Berkshire for cash.

If Scott wished to donate to some charitable venture during his lifetime, he could still give shares and have them repurchased by Berkshire, without the need for any issuance of Berkshire stock. Or alternatively, now that the buyback taboo has been broken, Berkshire could just purchase Berkshire shares on the open market to finance the tax-free transfer of Berkshire shares in exchange for MidAmerican shares of an equivalent value. In that case, I can see no reason for Berkshire's share price to be a factor in the decision to buy out the minority share of MidAmerican. The challenge would be to determine a mutually acceptable price for the MidAmerican shares.

Regards, DTM
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