Sempra Energy (SRE) agreed to buy Texan power distributor Oncor Electric Delivery and its bankrupt parent Energy Future Holdings for an enterprise value of about $18.8 billion, bursting in on Berkshire Hathaway's (BRK.A) (BRK.B) 's $18.1 billion offer.
Berkshire Hathaway Energy said Aug 18 that it had reached an agreement with five stakeholders in Texas, including the staff at the Public Utility Commission of Texas, resolving all outstanding issues in its bid for Oncor.
Sempra's deal for Energy Future Holdings Corp., which owns 80 per cent of Oncor, is valued at about US$18.8 billion including debt, the San Diego-based company said in a statement dated August 20.
According to Reuters, the board at Energy Future opted for the Sempra bid after receiving assurances from Sempra officials that its offer for Oncor would receive approval from the Public Utility Commission of Texas, as well as a USA bankruptcy judge.
The deal is key to ending Energy Future's bankruptcy, which has now spent more than three years working to restructuring nearly US$50 billion of debt.
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. Berkshire had said that it wouldn't raise its bid and was prepared to walk away.More news: US Centcom chief stresses sustained ties with Pakistan - Newspaper
NextEra's bid came after Hunt Consolidated abandoned its bid for the Texas utility. "And we've already seen two fail in this situation".
Sempra is now the fourth party to make an offer for Oncor, a transmission company that delivers power to more than 3.4 million homes and businesses, with transmission and distribution lines cover about 122,000 miles.
"Berkshire Hathaway Energy has offered a positive, simple, straightforward deal that benefits Oncor and its customers", Oncor chief executive officer Bob Shapard said in an email early Sunday that was distributed by a company spokesman.
Energy Future was formed a decade ago by KKR & Co., TPG Capital and Goldman Sachs Capital Partners as part of the biggest leveraged buyout in history.
Sempra is simply Oncor's latest suitor after a series of acquisition bids and rejections over the last few years.
Elliott Management had resisted Berkshire Hathaway's offer, claiming it was too low.