Berkshire to exchange $1.4 billion in Phillips 66 stock for unit

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Berkshire Hathaway agreed to buy a pipeline-services business from Phillips 66 in exchange for about 19 million shares that Warren Buffett's company already holds in the energy firm.

The stock is valued at about $1.42 billion at Monday's closing price in New York. The specific number of shares Berkshire will pay for Phillips Specialty Products will be determined when the deal is completed, Phillips 66 said in a regulatory filing.

Phillips 66 has a number of business units stemming from the spinoff of ConocoPhillips in 2012 that aren't highly valued by investors and the unexpected transaction will be seen as a positive, Cory Garcia, a Houston-based analyst with Raymond James, said Monday in a telephone interview.

"Phillips is figuring out another way to extract value from a business that they think is being weighed down by a valuation that isn't justified," Garcia said. "While funds from this unit flow through the income statement, they haven't historically called out its impact. It's a nice, accretive transaction."

Berkshire held more than 27 million shares in Houston-based Phillips 66 at the end of September, according to regulatory filings. The companies expect to complete the transaction in the first half of next year after a regulatory review, according to today's filing.

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