Sempra Out Bids Berkshire for Oncor

Sempra Energy the owner of utilities based in the U.S. agreed to acquire Oncor Electric Delivery Co, the power distributor based in Texas for just over $9.45 billion. That topped the bid made by Berkshire Hathaway, owned by Warren Buffet, made in July.

The deal my Sempra to acquire Energy Future Holdings, which is an 80% owner of Oncor, has a value of $18.8 billion, including its debt, said the company, based in San Diego in an August 20 statement.

Sempra is planning to fund its purchase through its equity and debt, along with third-party equity on top of $3 billion in borrowings by the company that has recently been reorganized.

Just over a month ago, Berkshire entered into a deal to acquire Oncor for the price of $9 billion. Just after that, Elliott Management operated by billionaire Paul Singer came back saying it was attempting to bring together another bid that might be $9.3 billion.

Elliott voiced support of the deal on Monday by Sempra, saying through a statement emailed to the media, that the deal provided significantly greater recoveries to all creditors of Energy Future than did the offer by Berkshire.

Sempra is the most recent to join a group of suitors who sought to take control of Oncor since Energy Future its parent in 2014 declared bankruptcy.

The deal might end the escalating fight between Singer and Buffett and would be the largest acquisition by Sempra since being formed during 1998.

Sempra was given financing commitments from Morgan Stanley and RBC Capital for this deal, it said through its released statement.

It is expecting the transaction to be fully completed during the first six months of 2018.

The deal is very important to end the bankruptcy of Energy Future, which has spent over three years working to restructure nearly $50 billion in debt.

A judge was set to consider the offer by Berkshire during a court hearing on Monday in Delaware.

The agreement to merge with Berkshire included a $270 million termination fee that was subject to a few conditions and the approval of the court, showed a regulatory filing. Buffett’s Berkshire said it would walk from the deal if a judge to not approve its plan Monday.

Others attempted but failed to take control of the utility based in Texas, which serves close to 10 million customers while operating over 106,000 miles of distribution lineage.

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