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Bloomberg
US utility owner Sempra Energy has agreed to buy control of Texas power distributor Oncor Electric Delivery Co. for $9.45 billion, topping a bid by Warren Buffett’s Berkshire Hathaway Inc. just last month.
Sempra’s deal for Energy Future Holdings Corp., which owns 80 percent of Oncor, is valued at about $18.8 billion including debt, the San Diego-based company said in a statement dated August 20. Sempra plans to fund the purchase through a combination of its own debt and equity, as well as third-party equity and $3 billion of borrowings by the reorganized company, it said.
Just six weeks ago, Berkshire struck a deal to buy Oncor for $9 billion. Shortly after, billionaire investor Paul Singer’s Elliott Management Corp. fired back, saying it was working to pull together a rival bid that may total $9.3 billion. Elliott voiced its support of the Sempra deal on Monday, saying in an emailed statement it provides “substantially greater recoveries†to all Energy Future creditors than Berkshire’s offer.
Sempra is the latest to join a line of suitors who’ve sought to take over Oncor since its parent Energy Future declared bankruptcy in 2014. The deal may put an end to the escalating battle between Buffett and Singer and would be Sempra’s largest acquisition since it was formed in 1998, based on data compiled by Bloomberg, expanding its US utility territory beyond California.
Sempra received financing commitments for the deal from RBC Capital Markets and Morgan Stanley, it said in its statement. It expects the transaction to be completed in the first half of next year. Lazard and Morgan Stanley advised Sempra, with White & Case LLP acting as legal advisers, it said.
The deal is key to ending Energy Future’s bankruptcy, which has now spent more than three years working to restructuring almost $50 billion of debt. A judge was scheduled to consider Berkshire’s offer during a US bankruptcy court hearing in Wilmington, Delaware, on Monday.
The merger agreement with Berkshire included a termination fee of $270 million, subject to certain conditions and court approval, according to a regulatory filing. Berkshire has said it’ll walk away from the deal if a judge doesn’t approve the plan on Monday. Others have tried and failed to take over the Texas utility, which serves almost 10 million customers and operates over106,000 miles (170,590 kilometers) of distribution lines.