Berkshire Hathaway Energy Agreement to Acquire Oncor Terminated

Posted August 22, 2017

Multiple sources reported Sunday evening that Sempra's $9.45 billion offer for Oncor has been accepted by Energy Future Holdings, a bankrupt Texas utility that is the parent company of Oncor.

The $9.45 billion cash deal to acquire Energy Future and its ownership in Oncor includes Sempra's assumption of Oncor's debt, making the total value of the transaction $18.8 billion.

Sempra Energy's bid of $9.45 billion has upped the offer from Berkshire Hathaway (NYSE:BRK.A), who offered $9 billion for Oncor.

Warren Buffett's Berkshire Hathaway had agreed earlier in the summer to buy Energy Future for $9bn after two previous attempts to sell the company were blocked by Texas regulators.

"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 Sempra chief executive Debra Reed.

Berkshire Hathaway Energy owns a portfolio of locally managed businesses that share a vision for a secure energy future, make sustainable investments to achieve that vision and had $85 billion of assets as of December 31, 2016.

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A bankruptcy judge and Texas regulators would need to sign off on the SRE takeover; BRK's deal was scheduled to go before the judge in DE on Monday. Sempra shareholders would own roughly 60 percent of the reorganized company following the transaction. Berkshire Hathaway declined to comment on the development. Both will serve on Oncor's board.

In May 2016, an $18 billion deal to buy Oncor led by Dallas billionaire Ray Hunt fell apart over regulatory concerns. The regulatory commitments were included in an agreement signed by five parties that supported the proposal.

Sempra said in its statement announcing the deal that it "will maintain the existing independence of Oncor's board of directors, which has protected Oncor and its customers during the ongoing Energy Future bankruptcy".

Judge Christopher Sontchi told the bankruptcy court on Monday that the new bid was a "big change" that would clearly benefit Energy Future and its creditors.

Energy Future Holdings, which had previously been known as TXU Corp, ran into severe financial trouble in recent years. A deal would be Sempra's largest since at least 1997, according to data compiled by Bloomberg, and expand the company's U.S. utility territory beyond California. Oncor's general counsel, Allen Nye, will become Oncor's CEO.

Reed added: "It is important for Oncor to remain financially strong". Buying the notes means Elliott and and Sunrise Partners, which also opposes Berkshire's offer valued at $18.2 billion with debt, own the majority of every class of impaired credit in the holding company, one of the people said.