Published: Tue, August 22, 2017
Markets | By Lucia Cruz

Sempra Energy to buy Oncor for $9.45B, beating Buffett

Sempra Energy to buy Oncor for $9.45B, beating Buffett

US utility owner Sempra Energy has agreed to buy control of Texas power distributor Oncor Electric Delivery for $9.45 billion, topping a bid by Warren Buffett's Berkshire Hathaway just last month.

Until the emergence of Sempra, ownership of Energy Future and its valuable Oncor subsidiary appeared to going to either Mr. Buffett's Berkshire Hathaway, which bid $9 billion for it, or Mr. Singer's hedge fund, Elliott Management, which is its biggest creditor and has opposed Berkshire's offer.

Energy Future's board on Sunday favored Sempra's offer over Berkshire Hathaway $9 billion deal to buy Oncor, sources told Reuters, after Sempra also offered assurances it could get its acquisition of Oncor approved by Public Utility Commission of Texas, as well as a US bankruptcy judge.

Greg Abel, who leads Berkshire Hathaway Energy, said he's disappointed the Oncor deal was terminated by Energy Future.

Officials at Sempra, Oncor and Berkshire Hathaway did not respond to requests for comment Sunday night but the deal is expected to be announced Monday.

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But in a court proceeding on Friday in the Texas bankruptcy court overseeing Energy Future's case, a lawyer for Elliott mentioned the presence of a then-unnamed utility operator that could pay $9.3 billion for Energy Future. A judge was scheduled to consider Berkshire's offer during a USA bankruptcy court hearing in Wilmington, Delaware, on Monday. The company said it would own about 60 percent of Oncor under the deal, which would include financing from megabanks RBC Capital Markets and Morgan Stanley. But Berkshire Hathaway stood firm on its offer, saying last week that it would not be increasing the bid. Both will serve on Oncor's board.

Earlier this year, Texas utility regulators quashed an offer from NextEra Energy Inc., valued at $18.4 billion including debt, after the utility giant refused to establish ring-fencing measures to protect Oncor's credit.

Sempra said in its statement announcing the deal that it "will maintain the existing independence of Oncor's board of directors, which has protected Oncor and its customers during the ongoing Energy Future bankruptcy". The regulatory commitments were included in an agreement that was signed by five significant parties that supported the proposal. The deal is expected to close in the first half of next year.

"It is important for Oncor to remain financially strong", Reed said.

Energy Future Holdings, which had previously been known as TXU Corp, ran into severe financial trouble in recent years. Allen Nye, now Oncor's general counsel, would be named the utility's CEO, according to a press release.

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