Sempra Energy launches fourth attempt to acquire Oncor

Munger partnership

Dallas-based Oncor serves nearly 10 million customers and operates more than 170,590 kilometres of distribution lines.

San Diego, California-based Sempra has made a $9.3 billion offer for the Texas utility, said the people, who declined to be identified because the matter is not public.

Berkshire had told the PUCT it would accept "ringfencing" on its acquisition of Oncor, restricting its ability to extract cash from the company or add more debt to it. Sempra has now indicated it that will make similar concessions on ringfencing, according to the sources.

The new proposal would see Sempra own 60% of a restructured Energy Future business and in a statement it noted that the deal had a transaction value of almost US$19bn including Oncor's debt, which will be assumed by Sempra.

Sempra chairman and president Debra L. Reed said: "With its strong management team and long, distinguished history as Texas' leading electric provider, Oncor is an excellent strategic fit for our portfolio of utility and energy infrastructure businesses".

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. Energy Future filed for bankruptcy in 2014.

The deal is expected to close in the first half of 2018 after clearing regulatory and legal hurdles. Analysts said the simplicity of Buffett's offer could play in its favor, but Elliott Management opposed the deal, saying it undervalued Oncor.

Allen Nye, who is now Oncor's general counsel, will succeed Bob Shapard as the company's CEO.

Two other offers prior to Berkshire Hathaway had been blocked by regulators in Texas.

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.

Earlier this year, the PUCT shot down the sale of Oncor to NextEra Energy Inc, because it considered the proposed financial structure too risky for ratepayers. A group led by Hunt Consolidated Inc dropped a bid a year ago after the state imposed conditions it found too onerous.

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