Berkshire Hathaway Outbid By Sempra For Oncor Electric Delivery

Andrew Cummings
August 21, 2017

Multiple sources reported Sunday evening that Sempra's $9.45 billion offer for Oncor Electric has been accepted by Energy Future Holdings, a bankrupt Texas utility that is the parent company of Oncor.

Sempra Energy is about to wrap up a mega-deal to acquire a power transmission company located in Dallas, and the San Diego-based Fortune 500 company seems to have beat out Warren Buffet in the process. It said it will fund the deal with a combination of its own debt and equity, what it called third party equity and "3 billion of investment grade debt at the reorganized holding company".

Sempra said the transaction, which is due to complete in the first half of next year, will enhance earnings beginning in 2018 and further expand its regulated earnings base, while serving as a platform for future growth in the Texas energy market and US Gulf Coast region. However, in response to Sempra's bid, Berkshire offered to allow Energy Future to keep an Oncor dividend, but that proposal was not enough to bridge the gap in price, the sources added. Oncor and Energy Future declined to comment.

Berkshire had offered $9 billion, while Elliott had been working on a bid that may total $9.3 billion. Energy Future filed for bankruptcy in 2014. Its companies include: San Diego Gas & Electric, Southern California Gas Co., Sempra South American Utilities, Sempra Mexico, Sempra Renewables and Sempra LNG & Midstream - the latter of which is building a liquefied natural gas export terminal in Port Arthur, Texas.

Creditors for Energy Future had argued that Buffett´s offer undervalued the business. It worked, keeping Oncor financially healthy even as Energy Future sank.

A separate plan to sell Oncor to a group of creditors and investors led by privately-held Hunt Consolidated Inc of Texas collapsed in 2016, after hitting obstacles at the regulator. A group led by Hunt Consolidated Inc dropped a bid a year ago after the state imposed conditions it found too onerous.

"While the Commission will ultimately decide, it's clear that key stakeholders who have signed the settlement agree the bid would be good for Texas".

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