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Buffett Won’t Go Higher than $9B For Oncor Utility Giant

Warren Buffett

Berkshire Hathaway Energy is standing by its US$9-billion offer to buy 80 percent of Texas-based Oncor Electric Delivery Company and will not be raising the offer, Warren Buffett’s company said on Wednesday.

The statement comes amid a bidding war with Elliott Management for Oncor’s parent company, Energy Future Holdings, which filed for Chapter 11 restructuring earlier this year.

“We appreciate the continued opportunity to collaborate with many stakeholder groups in Texas and thank them for their outstanding support, which sets our offer apart from any other bid,” Greg Abel, Berkshire Hathaway Energy chairman and CEO, said in the statement.

“We’re committed to being an exceptional long-term partner in Texas and our simple, straightforward deal is good for Oncor, its customers and the state,” the manager noted.

“We already have a number of excellent companies operating in Texas. It is a great place to do business, and we look forward to continuing to invest in the state,” Warren Buffett said.   

Berkshire is pitching its acquisition offer as straightforward and gaining growing support among influential stakeholder groups in Texas.

Elliott, on the other hand, is the biggest creditor of Oncor’s parent Energy Future Holdings and has offered US$9.3 billion. Elliott’s offer implies a total enterprise value for Oncor of US$18.5 billion, including debt. This compares with Berkshire’s valuation of US$18.1 billion. 

Related: Oil Rises, But Saudis Face Daunting Dilemma

Elliott has been buying up the debt of Energy Future Holdings in recent months, and has bought a different class of impaired notes from Fidelity Investments, which makes any deal with Energy Future Holdings contingent on Elliott approval, The Wall Street Journal reported on Wednesday, citing people familiar with the matter.

According to The Journal’s sources, Elliott now controls all the impaired classes of Energy Future Holdings debt, and has told the court that it would not endorse the Berkshire acquisition offer as-is.

By Tsvetana Paraskova for Oilprice.com

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