If Buffett buys NV Energy, will customers trust the company more?
Nati Harnik / AP
When retiree Shelley Chin taught junior high school in Henderson, she told her students about people like Warren Buffett and Bill Gates, billionaire businessmen whose hard work paid off big.
Little did she know, she would be poised years later to earn her own chunk of change from one of them.
Chin owns stock in NV Energy, the Las Vegas power company Buffett’s MidAmerican Energy Holdings Co. plans to buy for $5.6 billion cash. The sale was announced last week and is expected to close during the first quarter of next year.
Buffett, the CEO of MidAmerican’s parent Berkshire Hathaway, will pay stockholders $23.75 a share if the deal is approved, a price they haven’t seen since 1999. Buffett needs approval from shareholders and state and federal officials to complete the deal.
It hasn't yet been determined how or when a shareholder vote will be held, NV Energy spokeswoman Jennifer Schuricht said.
Chin, of Anthem, retired from teaching seven years ago and now works part time as an usher at MGM Grand Garden Arena. Needless to say, she is not a big investor.
She bought her stock in the mid-1980s, when it hovered between $13 and $19 a share. It is the only stock she owns, and she is not sure how many shares she has. Despite its inconsistent performance over the years — it plunged below $3 in 2003 — she has held onto it.
Chin said she will probably vote for the sale. Buffett, one of the world’s richest men with a net worth of more than $50 billion, would not buy a company that’s “going to remain stagnant,” Chin figures.
As she sees it, many people view NV Energy as “the Evil Empire.” She said people are frustrated with the company’s rate hikes and push for digital smart meters.
“Maybe they’ll distrust the company a little bit less with Buffett’s name attached to it,” Chin said.
Bill Shank of northwest Las Vegas also plans to vote for the sale.
He worked for NV Energy for 30 years, mostly as a lineman and foreman, and said he was “kind of forced” to retire about three years ago. He acquired company stock shortly after he joined NV Energy's workforce. He owns about 1,500 shares and said the buyout plan “looks good so far.”
“It’s more than what it’s worth on the market,” he said of the offering price.
Chin and Shank are just two of the thousands of people who can vote on the deal. Many investors hold far more influence over the results than the two locals.
In response to questions about NV Energy's public image, Schuricht said company officials "make every effort to work with our customers and address their concerns." She also declined to comment on Shank's forced-retirement claim, saying she can't discuss personnel matters.
Investors get one vote for each share they hold. There were 235 million shares of outstanding common stock as of May 7.
Ownership is highly fragmented. About 14,000 people and institutions own shares in the company, according to the most recent data. That doesn't include people who hold stock through brokers.
NV Energy’s board and top executives collectively own less than 1 percent of the stock.
Its biggest investors are on Wall Street. JPMorgan Chase & Co., the country’s largest bank, led the pack with an 8.4 percent ownership stake as of Dec. 31, 2012, according to a filing with the Securities and Exchange Commission.
BlackRock, the world’s largest asset manager, was second with 6.9 percent. The Vanguard Group, another large money manager, was third with 5.5 percent, followed closely by rival AllianceBernstein, with 5.4 percent.
The firms declined to comment on the Buffett buyout.
In the meantime, out-of-state lawyers increasingly are prowling for shareholders who want to sue NV Energy for selling at too low of a price.
At least six law firms have announced investigations of NV Energy’s board of directors in connection with the Buffett deal.
Lawsuits seeking more money from U.S. buyouts are commonplace. In 2010 and 2011, almost every acquisition announced worth at least $100 million prompted multiple shareholder lawsuits.
However, only a small fraction resulted in payments to stockholders, according to Cornerstone Research. Most of the cases settled for additional disclosures or, less frequently, changes in the merger terms.