Sempra Energy gazumps Warren Buffett with US$9.45bn deal for Oncor

Munger partnership

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Until the emergence of Sempra, ownership of Energy Future and its valuable Oncor subsidiary appeared to going to either Mr. Buffett's Berkshire Hathaway, which bid $9 billion for it, or Mr. Singer's hedge fund, Elliott Management, which is its biggest creditor and has opposed Berkshire's offer.

Sempra Energy's Oncor offer bested the $9 billion in cash Berkshire Hathaway put forward before facing resistance from creditors in bankruptcy court.

Elliott recently bought debt in Oncor's parent in its latest effort to block Berkshire's bid, people familiar with that matter said August 16.

If approved, the acquisition would be a massive one for Sempra Energy, which has a market value of about $30 billion. Its companies include: San Diego Gas & Electric, Southern California Gas Co., Sempra South American Utilities, Sempra Mexico, Sempra Renewables and Sempra LNG & Midstream - the latter of which is building a liquefied natural gas export terminal in Port Arthur, Texas.

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"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", said Debra Reed, Sempra chief executive.

Sempra Energy's headquarters in downtown San Diego. Sempra shareholders would own roughly 60 percent of the reorganized company following the transaction.

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. Energy Future owns 80 percent, but Sempra plans to sell some of that equity to other outside investors, according to people familiar with the matter. Many of these factors are outside the control of Berkshire Hathaway Energy Company and could cause actual results to differ materially from those expressed or implied by such forward-looking statements.

Sempra Energy expects the transaction to be completed in the first half of 2018. Over the past two years, the Ray L. Hunt family of Dallas and Florida-based NextEra Energy have separately tried to buy Oncor, Energy Future's most coveted asset. NextEra sought to rework Oncor's ringfencing provisions to give it access to dividends from the regulated utility, but regulators balked at both attempts.

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The energy company said in a statement when announcing the deal that it "will maintain the existing independence of Oncor's board of directors, which has protected Oncor and its customers during the ongoing Energy Future bankruptcy". The regulatory commitments were included in an agreement that was signed by five significant parties that supported the proposal. Oncor's general counsel, Allen Nye, will become Oncor's CEO.

Energy Future Holdings, which had previously been known as TXU Corp, ran into severe financial trouble in recent years.

Reed added: "It is important for Oncor to remain financially strong".

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