Sempra Energy to buy Oncor for $9.45n

Javier Stokes
August 22, 2017

Sempra Energy is the mystery third bidder for Oncor Electric Delivery Co. that is competing with Berkshire Hathaway Inc. and Elliott Management Corp., according to people familiar with the matter.

Until the emergence of Sempra, ownership of Energy Future and its valuable Oncor subsidiary appeared to going to either Mr. Buffett's Berkshire Hathaway, which bid $9 billion for it, or Mr. Singer's hedge fund, Elliott Management, which is its biggest creditor and has opposed Berkshire's offer. A judge was scheduled to consider Berkshire's offer during a USA bankruptcy court hearing in Wilmington, Delaware, on Monday.

Sources told Reuters earlier that Sempra had decided to make an offer for Oncor in the last three weeks, after seeing the opposition that Berkshire faced from Elliott.

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. The company said it would own about 60 percent of Oncor under the deal, which would include financing from megabanks RBC Capital Markets and Morgan Stanley.

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.

In July, Buffett's company had suggested its now-scuttled deal would fare better.

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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. Energy Future's earlier efforts to sell the firm have failed.

Sempra said Oncor's board will retain its existing independence.

Sempra has committed to supporting Oncor's ongoing plan to invest $7.5 billion over a five-year period to expand and reinforce its transmission/distribution network.

"It is important for Oncor to remain financially strong", Reed said.

When the deal is completed, the Oncor Chief Executive Bob Shapard will become executive chairman of Oncor's board. Reed said the purchase "will help ensure that Texas utility customers continue to receive outstanding electric service".

The Texas Tribune provided this story.

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