Sempra Energy bids $9.45B for Oncor, topping Buffett offer

CEO Warren Buffett plays bridge during the Berkshire annual meeting weekend in Omaha Nebraska U.S. on May

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 shareholders would own roughly 60 percent of the reorganized company following the transaction. These businesses deliver affordable, safe and reliable service each day to more than 11.6 million electric and gas customers and end-users around the world and consistently rank high among energy companies in customer satisfaction.

After two earlier bids by other suitors failed, Berkshire Hathaway appeared to be set to make the acquisition, only to be blocked by investor Elliott Management Corp.in bankruptcy court, where the Berkshire bid was scheduled to be heard Monday.

Elliott recently bought debt in Oncor's parent in its latest effort to block Berkshire's bid, people familiar with that matter said August 16.

An agreement for Oncor is key to ending the bankruptcy of Energy Future, which has been restructuring nearly US$50 billion of debt for more than three years. Energy Future entered bankruptcy in 2014.

That turned out to be Sempra, which is based in San Diego and provides power to 32 million customers.

Last week, the hedge fund appeared to have found a way to stymie Berkshire's bid by acquiring a particular class of Energy Future's debt that effectively let it veto Mr. Buffett's offer. Buffett is known for shying away from bidding wars. A deal would be Sempra's largest since at least 1997, according to data compiled by Bloomberg, and expand the company's United States utility territory beyond California.

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The deal is subject to approvals from Texas utility regulators as well as a bankruptcy court overseeing the three-year old EFH proceeding, one of the largest bankruptcies ever. Previously, in April Texas regulators rejected a proposed $18 billion sale of Oncor to NextEra Energy Inc. 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.

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

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.

"It is important for Oncor to remain financially strong", said Reed, who expects the transaction to bring a "satisfactory resolution" to the bankruptcy case. There was Berkshire Hathaway's offer last month.

The deal calls for Oncor General Counsel Allen Nye to become the company's CEO, succeeding Bob Shapard, who becomes executive chairman.

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