Sempra Unplugs Buffett's Oncor Takeover
Sempra Energy (SRE) - Get Report agreed to buy Texan power distributor Oncor Electric Delivery and its bankrupt parent Energy Future Holdings for an enterprise value of about $18.8 billion, bursting in on Berkshire Hathaway's (BRK.A) - Get Report (BRK.B) - Get Report 's $18.1 billion offer.
Claiming the deal will strengthen Oncor's underlying financial strength and credit ratings, Sempra said it is committed to supporting Oncor's $7.5 billion, five-year capital investment plan.
San Diego-based energy services holding company said it will pay $9.45 billion in cash for the acquisition - - compared with the $9 billion on offer from Berkshire Hathaway. It said it will fund the deal with a combination of its own debt and equity, what it called third party equity and "3 billion of investment grade debt at the reorganized holding company."
The transaction is reportedly supported by activist investor Paul Singer's Elliott Management, which opposed Buffett's proposed acquisition of Dallas-based Oncor and has been buying Energy Future's unsecured bonds in order to block the Berkshire Hathaway deal.
Energy Future Holdings owns 80% of Oncor.
But Sempra's bid still has to be approved by regulators, including the Public Utility Commission of Texas, which previously blocked an $18.4 billion offer from NetEra Energy Inc., as not being in the public interest, thereby undoing Energy Future's reorganization plan and its chance to emerge from Chapter 11.
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