Berkshire Hathaway Energy to buy Oncor Electric Delivery for $11.25 bn
07 July 2017
Berkshire Hathaway Energy, a subsidiary of Warren Buffett's investment firm Berkshire Hathaway, yesterday struck a deal to buy Oncor Electric Delivery Company LLC for an equity value of about $11.25 billion.
The deal value is far lower than the $18.4 billion offer made last year by NextEra Energy for Oncor, which was ultimately scrapped after Texas regulators blocked the takeover over monopoly issues.
Berkshire Hathaway Energy yesterday said that it has executed a definitive merger agreement with reorganised Energy Future Holdings Corp (EFH), which will ultimately result in the acquisition of Oncor, one of the largest electric delivery company in the US.
Based in Dallas, Texas, Oncor is a regulated electric transmission and distribution service provider that serves 10 million customers across Texas.
It has approximately 122,000 miles of lines, more than 3.4 million meters across the state and employs more than 3,700 people.
Energy Future, formerly TXU Corporation, majority owner of Oncor had filed for a $42-billion bankruptcy in 2014, one of the largest bankruptcy proceedings to date in the US.
The all-cash deal for reorganized EFH is $9 billion implying an equity value of approximately $11.25 billion for 100 per cent of Oncor and is subject to closing conditions, including the receipt of required state, federal and bankruptcy court approvals.
The transaction is currently expected to be completed in the fourth quarter of 2017.
Berkshire Hathaway Inc already has a significant presence in Texas with multiple headquarters in the state, including BNSF Railway Company; Acme Brick Company; Justin Brands, Inc.; McLane Company, Inc.; Berkshire Hathaway Automotive; Star Furniture Company; TTI, Inc.; Charter Brokerage; LiquidPower Specialty Products Inc.; and Allie Beth Allman & Associates.
''Oncor is an excellent fit for Berkshire Hathaway, and we are pleased to make another long-term investment in Texas – when we invest in Texas, we invest big!'' said Warren Buffett, chairman of Berkshire Hathaway. ''Oncor is a great company with similar values and outstanding assets.''
''By joining forces with Berkshire Hathaway Energy, we will gain access to additional operational and financial resources as we continue to position Oncor to support the evolving energy needs of our state,'' said Bob Shapard, CEO of Oncor.
''Being part of Berkshire Hathaway Energy is a great outcome for Oncor. Oncor will remain a locally managed Texas company headquartered in Dallas, committed to the communities we serve, and our customers will continue to receive the safe and reliable service they have come to expect from our dedicated team of employees,'' he added.
Des Moines, Iowa-based Berkshire Hathaway Energy owns a portfolio of locally managed businesses, has $85 billion of assets and serves more than 11.6 million electric and gas customers and end-users around the world.