Sempra Energy Agrees to Buy Oncor Foiling Bidding Attempt by Berkshire

Published By : 22 Aug 2017 | Published By : QYRESEARCH

Sempra Energy, a San Diego-based natural gas utility company, has struck a rare deal on August 21, 2017 to buy Texas-based Oncor for estimated US$9.45 bn offered in cash. The deal seems to trigger upheaval in the area of mergers and acquisitions as Berkshire Hathaway Inc., owned by Warren Buffett, one of the most renowned investors narrowly missed the mark to get the tentative deal done.

Oncor, one of the most prominent transmission and distribution electric utilities in the U.S., is indirectly owned by Energy Future Holdings Corp., which has been blocked to sell the company’s shares by regulators at Texas twice previously.

The almost materialized deal by Berkshire, estimated for US$9 billion, ran into troubled waters in July this year after Energy Future's largest creditor, Elliott Management Corporation, had signaled the deal to be undervalued for Oncor.

Deal by Sempra to Offer Better Recovery Prospects for Creditors

According to speculations, Elliott had also made a $9.3 bn bid for buying Oncor. However, American hedge fund management firm disclosed that the proposed deal with Sempra will hopefully offer better prospects for Energy Future’s creditors to expedite their recoveries. According to market experts, Sempra has been actively vying for the deal after Berkshire faced opposition in July.

The board of Energy Future, supporting the bid, assured Sempra Energy that the deal would get favorably approved by Public Utility Commission of Texas. As revealed by the bidder, the deal is expected to be over by the mid of 2018, while its revenue will start reflecting gains from the year start.

Morgan Stanley and Lazard acted as financial advisors while White & Case LLP was the legal advisor throughout the deal. 

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