Sempra bests Berkshire with $9.45 billion offer for Oncor

Tammy Harvey
August 22, 2017

Sempra Energy (SRE) announced the $9.45 billion cash acquisition of Energy Future Holdings, which indirectly owns 80% of Dallas-based Oncor Energy Delivery, clinching the deal just six weeks after Warren Buffett's Berkshire Hathaway (BRKB) had struck an agreement to buy the largest electric transmission and distribution system in Texas.

San Diego-based Sempra expects to own about 60 per cent of the reorganised holding company after the transaction that is valued at $18.8 billion, including Oncor's debt, it said late on Sunday.

For now, Sempra has out-bid Berkshire, but Berkshire had worked with Texas regulators to craft a deal that would win their approval, and Sempra's deal is still subject to regulatory approval by the Public Utility Commission of Texas.

"Both Sempra Energy and Oncor share more than 100 years of experience operating utilities that deliver safe, reliable energy to millions of customers", said Debra L. Reed, chairman, president and CEO of Sempra Energy.

Sempra said Monday that it will also pick up $9.35 billion of the company's debt.

With San Diego Gas and Electric (SDG&E) and Southern California Gas Co. Energy Future filed for bankruptcy in 2014. Oncor holds the Texas energy transmission assets of bankrupt giant Energy Futures Holdings. But Berkshire Hathaway stood firm on its offer, saying last week that it would not be increasing the bid.


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 plans to maintain the existing independence of Oncor's board, which has protected the electricity company and its customers during the ongoing EFH bankruptcy that has dragged on for three years.

Allen Nye, who is now Oncor's general counsel, will succeed Bob Shapard as the company's CEO.

"It is important for Oncor to remain financially strong", said Reed, who expects the transaction to bring a "satisfactory resolution" to the bankruptcy case. It had announced rare support from utility commission and consumer groups, and it circulated a document with 44 regulatory commitments that it says parties that might intervene at the utility commission have already agreed to.

Claiming the deal will strengthen Oncor's underlying financial strength and credit ratings, Sempra said it is committed to supporting Oncor's $7.5 billion, five-year capital investment plan.

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