New York/Seattle/Houston: Warren Buffett is trimming one of his largest investments to avoid a regulatory headache.
On Tuesday, he announced that he would sell back 35 million shares of Phillips 66 to the oil refiner, so that his firm, Berkshire Hathaway Inc., could get below a 10% stake in the company.
“This transaction was solely motivated by our desire to eliminate the regulatory requirements that come with ownership levels above 10%," Buffett, Berkshire’s chairman and chief executive officer, said Tuesday in a statement. “We remain one of Phillips 66’s largest shareholders and plan to continue to hold the stock for the long term."
Buffett has pursued a similar strategy with his Wells Fargo & Co. stake. Last year, Berkshire cut its holding of the lender to get below a 10% threshold that would place some regulatory limits on how much business Buffett’s company could do with the bank.
Berkshire has long had ties to Phillips 66, the largest US refiner by market value. He built up a stake in the oil refiner and then agreed in 2013 to swap $1.4 billion of those shares for full ownership of the company’s pipeline-services business. In 2015, he disclosed a $4.5 billion stake in Phillips 66 and then continued to add to that holding.
According to the last Berkshire annual report, the majority of the Phillips 66 holding was acquired for an average price of about $78.31 a share. After the deal closes on 14 February, Berkshire will have 45.7 million shares, or about a 9.8% stake, according to the statement.
Phillips 66 is buying back the stock for $93.725 a share, in an agreement valued at $3.3 billion. That’s pennies less than what Phillips 66 was trading at when markets closed Tuesday. Bloomberg