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. Last Updated: 07/27/2016

Buffett Back on Scene With $5Bln Purchase

LONDON -- Warren Buffett struck a deal on Tuesday to buy the electric utility PacifiCorp for $5.1 billion from Scottish Power, his largest purchase in eight years. Sounding a bullish note for the energy industry in general, he promised to buy similar assets in the future.

Buffett, whose investing style has been scrutinized this year because of an investigation into the insurance industry, one of his longstanding favorites, said Tuesday that energy companies were a good fit with his company, Berkshire Hathaway, because they needed capital and provided steady returns.

He also trumpeted an eagerness to do big deals and a willingness to look outside the United States.

"There is no limit to the amount of money we would have available for the right acquisition," Buffett said during a news conference in London about the PacifiCorp deal. "Frankly, the bigger, the better," he said. Berkshire Hathaway has more than $40 billion to invest at the moment, he said. "If you have a big one out there, try us out."

Berkshire Hathaway will also assume $4.3 billion in debt in the deal. The purchase of PacifiCorp is Buffett's largest since Berkshire bought the General Re reinsurance business in 1998. That acquisition has not paid off as expected.

In the deal announced on Tuesday, PacifiCorp, which provides electricity to 1.6 million customers in six states in the Northwest, will become part of MidAmerican Energy Holdings, Buffett's utility company, which is based in Des Moines. The purchase will create a company with $10 billion in annual revenue.

Energy will be "an important industry 10, 20, 50 years from now, and Berkshire Hathaway hopes to expand its investments" in the sector, Buffett said during the news conference, where he appeared by teleconference. "We will look at energy assets around the world," he said, and invest through MidAmerican. MidAmerican owns CE Electric UK in northeastern England.

"The energy field is one that I basically like," Buffett said in a phone interview later on Tuesday. "It's not a business you can dream about, however. It's a capital-intensive business that provides decent returns. It's stable and it's predictable."

Scottish Power, which bought PacifiCorp in 1999 for about $10 billion, will record a ?927 million ($1.7 billion) charge because of the sale, which is expected to close early next year. The deal is subject to regulatory approval.

PacifiCorp has been a disappointment to Scottish Power investors. The company, based in Glasgow, failed to increase PacifiCorp's revenue as predicted and said on Tuesday that the unit's earnings were below expectations. Scottish Power executives said Tuesday that after looking at capital requirements and regulatory developments, they decided to sell the business.

The PacifiCorp deal comes as a new wave of buyers are showing interest in utilities like water and electricity worldwide. Cash-rich investors looking for a place to park their money are attracted to the relatively unglamorous, generally highly regulated industries because of their steady returns.