Sempra Energy can proceed with its US$9.45-billion acquisition of Oncor Electric Delivery Co. after a bankruptcy judge ruled in favor of the deal. The last hurdle that the suitor needs to clear is the approval of the Texas Public Utility Commission, which blocked two previous acquisition attempts on the grounds that they were lacking in guarantees to preserve the financial integrity of Texas’ largest regulated utility.
Oncor has been operating under bankruptcy protection for the last three years, with its parent, Energy Future Holdings Corp., having accumulated US$50 billion in debt that it is still in the process of restructuring.
Sempra emerged as a bidder for Energy Future’s 80-percent stake in Oncor last month, rivaling Berkshire Hathaway and Elliott Management Corp. Berkshire’s bid valued Oncor at US$9 billion, and Elliott was prepared to offer US$9.3 billion, according to reports from the time.
Earlier bidders for the Dallas-based utility that serves 10 million customers and operates 106,000 miles of distribution lines included NextEra Energy and a group of companies led by Hunt Consolidated Inc. NextEra dropped its offer after the Texas regulator demanded that it protect Oncor’s credit, and Hunt Consolidated left the race after the Texas Public Utility Commission asked it to adhere to conditions it found unreasonable. The consortium even sued the regulator over these conditions.
Berkshire Hathaway had everything going for it, including approval from the staff of the state PUC, but it never got the chance to put its case to the bankruptcy court as the seller, Fox News reported, cut a deal with Sempra, which offered a more attractive price, including a lower breakup fee of US$190 million versus Berkshire’s US$270 million.
The winning bidder will likely file for approval with the Texas PUC in October and the commission will have 180 days to review the bid and reach a decision.
By Irina Slav for Oilprice.com
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Irina is a writer for the U.S.-based Divergente LLC consulting firm with over a decade of experience writing on the oil and gas industry.