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Sempra to buy Oncor for $9.45b

22 August 2017

Energy Future Holdings, the vehicle that owns Oncor, previously had a deal with Buffett's Berkshire Hathaway that valued the business at US$9bn. Berkshire issued a statement last week saying it had no plans to raise its offer for Oncor.

The hedge fund, which had reportedly been structuring its own deal for Oncor, opposed the acquisition on the grounds that "the Berkshire transaction does not provide such value". Energy Future entered bankruptcy in 2014.

Officials at Sempra, Oncor and Berkshire Hathaway did not respond to requests for comment Sunday night but the deal is expected to be announced Monday. Oncor holds the Texas energy transmission assets of bankrupt giant Energy Futures Holdings.

Among Sempra's holdings is San Diego Gas & Electric and Southern California Gas. Sempra has about 32 million customers in the USA and Mexico and employs about 16,000.

A bankruptcy judge and Texas regulators would need to sign off on the SRE takeover; BRK's deal was scheduled to go before the judge in DE on Monday. The company said it would own about 60 percent of Oncor under the deal, which would include financing from megabanks RBC Capital Markets and Morgan Stanley. The deal still needs the approval of the Public Utility Commission of Texas, U.S. Bankruptcy Court of Delaware, Federal Energy Regulatory Commission and the U.S. Department of Justice.

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Sempra Energy is venturing where other companies have stumbled.

Dallas-based Oncor serves nearly 10 million customers and operates more than 170,590 kilometres of distribution lines. NextEra sought to rework Oncor's ringfencing provisions to give it access to dividends from the regulated utility, but regulators balked at both attempts.

Oncor now charges the lowest rates among its peers in Texas. Sempra said Monday, Aug. 21, that it will also pick up $9.35 billion of the companys debt. Energy Future's earlier efforts to sell the firm have failed. Allen Nye, now Oncor's general counsel, would be named the utility's CEO, according to a press release.

"It is important for Oncor to remain financially strong", said Reed, who expects the transaction to bring a "satisfactory resolution" to the bankruptcy case. Reed said the purchase "will help ensure that Texas utility customers continue to receive outstanding electric service".

Sempra to buy Oncor for $9.45b