Sempra seals deal to buy Oncor

21 August, 2017, 20:02 | Author: Leticia Walters
  • CEO Warren Buffett plays bridge during the Berkshire annual meeting weekend in Omaha Nebraska

Elliott Management, a key creditor of Energy Future, opposed an earlier offer from Berkshire Hathaway.

That overtakes the $18bn in cash and assumed debt under a Berkshire deal announced July 7.

Buffett is famous for refusing to take part in bidding wars and the Wall Street Journal reported Sunday that Sempra had sweetened its initial bid of $9.3 billion for Oncor.

The announcement signaled that Oncor's parent company has abandoned the $18 billion deal that Berkshire Hathaway, Buffett's multinational conglomerate, unveiled six weeks ago to much fanfare. The company filed for bankruptcy in April 2014, citing $40 billion in debt.

"With its strong management team and long, distinguished history as Texas' leading electric provider, Oncor is an excellent strategic fit for our portfolio of utility and energy infrastructure businesses", said Debra Reed, Sempra chief executive.

Dallas-based Oncor serves nearly 10 million customers and operates more than 170,590 kilometres of distribution lines.

Sempra Energy's headquarters in downtown San Diego.

Reed said the acquisition would serve as "a platform for future growth in the Texas energy market and US Gulf Coast region".

Sempra Energy is venturing where other companies have stumbled.

Despite Energy Future's problems, Oncor is considered a good investment by many, including Buffett.

Earlier this year, the PUCT shot down the sale of Oncor to NextEra Energy Inc, because it considered the proposed financial structure too risky for ratepayers. The deal is expected to close in the first half of next year. Allen Nye, now Oncor's general counsel, would be named the utility's CEO, according to a press release.

Oncor services about 10 million customers in Texas and employs about 3,700 people.

Sempra is comfortable with conditions that Berkshire Hathaway has already agreed to, including ringfencing measures to protect Oncor's credit rating and preserve control of its board, that are seen as key to winning the support of Texas regulators, the person said.

The Texas Tribune provided this story.

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