Sempra Energy Reaches Deal to Acquire Oncor -- Update
August 20 2017 - 11:12PM
Dow Jones News
By Dana Mattioli and David Benoit
Sempra Energy has reached a deal to buy Oncor for $9.45 billion
after swooping in to snatch the power-transmission company away
from Warren Buffett's Berkshire Hathaway Inc.
Sempra clinched the deal Sunday after raising an earlier offer
of $9.3 billion, according to people familiar with the matter.
Berkshire, which last month sealed a deal to buy Oncor for $9
billion, had earlier indicated it wouldn't raise its offer amid
opposition to its proposal.
The new deal, which could be announced imminently, is expected
to win the support of Elliott Management Corp., a key investor that
was seeking to block the Berkshire deal, some of the people said.
It would make Sempra the fourth party to reach an agreement with
Oncor's bankrupt parent, Energy Future Holdings Inc., as two
earlier deals were blocked by Texas regulators.
A bankruptcy judge would need to sign off on the Sempra
takeover, as would Texas regulators. Berkshire's deal was scheduled
to go before the judge in Delaware on Monday.
The Wall Street Journal reported Friday that there was a new
bidder for Oncor; Bloomberg later reported it was Sempra.
The new agreement would be the latest twist in the long-running
saga of Energy Future, formerly TXU, which was the biggest buyout
in history but ran into trouble with a heavy debt burden. The
company has been trying to sell its 80% stake in Oncor, its crown
jewel, to pay back creditors.
Sempra owns San Diego Gas & Electric and Southern California
Gas and has a market value of about $30 billion, much smaller than
cash-rich Berkshire. Mr. Buffett is well-known for refusing to
engage in bidding wars.
Elliott had amassed the biggest position in Energy Future debt
and last week bought a small set of bonds from Fidelity Investments
that essentially gave it a blocking position for any deal. The
activist had objected to Berkshire's deal from the day it was
announced. The hedge fund had been attempting to assemble a group
to mount a competing transaction.
Berkshire's deal had surprised Elliott. But Elliott was aware of
the Sempra bid and last week its lawyers disclosed the offer's
existence, without saying who made it, in a court hearing.
Mr. Buffett has been eager for big deals to spend his nearly
$100 billion cash position, and energy has been a key target in
recent years. Berkshire Hathaway Energy, the subsidiary that made
the Oncor bid, is run by Greg Abel, who is considered a leading
candidate to succeed Mr. Buffett.
The Berkshire deal includes a $270 million breakup fee, but
Elliott has also challenged that in bankruptcy court.
--Nicole Friedman contributed to this article.
Write to Dana Mattioli at dana.mattioli@wsj.com and David Benoit
at david.benoit@wsj.com
(END) Dow Jones Newswires
August 20, 2017 22:57 ET (02:57 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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