Berkshire nudged out of Oncor by Sempra Energy's $9.45-bn bid
21 August 2017
Bankrupt Texas utility Energy Future Holdings is set to accept a $9.45-billion bid for Oncor by Sempra Energy as against Warren Buffett's Berkshire Hathaway Inc, which offered $9 billion, according to people close to familiar with the matter, Reuters reported.
According to commentators, the development marked a reverse for Buffett, who avoids bidding wars for companies and had set sight on the company, two months ago, after two previous attempts by Energy Future to sell it were blocked by Texas regulators.
It also marked a defeat for Greg Abel, the 55-year-old chief executive of Berkshire's energy unit who many investors consider a top candidate to take over from Buffett, 86, at the Omaha, Nebraska-based parent company's helm.
The board of Energy Future decided to make the switch yesterday after Sempra also offered assurances it could get its acquisition of Oncor approved by the Public Utility Commission of Texas (PUCT), as also a US bankruptcy judge, according to the sources.
In a statement it issued last week, Berkshire said it would not be raising its offer for Oncor. However, in response to Sempra's bid, Berkshire offered to allow Energy Future to keep an Oncor dividend, but the proposal fell short to cover the gap in price, the sources added.
The new deal, which could be announced shortly, is expected to win the support of Elliott Management Corp, a key investor, seeking to block the Berkshire deal, according to some of the people.
A bankruptcy judge would need to sign off on the Sempra takeover, as would Texas regulators. Berkshire's deal was scheduled to go before the judge in Delaware on Monday.
The Wall Street Journal reported Friday that Oncor had a new bidder; which Bloomberg later reported as Sempra.
Sempra owns San Diego Gas & Electric and Southern California Gas and boasts a market value of about $30 billion, much lower than cash-rich Berkshire's.