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

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

Californian utility group Sempra Energy has agreed to buy Texas-based utility firm Oncor Electric Delivery in a $18.8bn deal. Energy Future entered bankruptcy in 2014, saddled with more than $40 billion in debt due to cratering energy prices.

San Diego-based Sempra announced the deal today, after Oncor's owner, Energy Future, abandoned a deal to sell to Buffett's Berkshire Hathaway after coming under pressure from an activist investor.

Sempra chairman and president Debra L. Reed said: "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".

Berkshire had issued a statement last week to say it would not be raising its offer for Oncor.

Sempra decided to make an offer for Oncor in the last three weeks, after seeing the opposition that Berkshire faced from Elliott as an opportunity to interlope, according to the sources.

Elliott, which was said to have explored making a larger bid for Oncor itself, has indicated it is supportive of the Sempra offer.

Reed said the acquisition would serve as "a platform for future growth in the Texas energy market and US Gulf Coast region".

Sempra, which a year ago achieved revenues of over $10bn, claimed the deal would begin to enhance its earnings from the beginning of 2018.

"Berkshire Hathaway Energy has offered a positive, simple, straightforward deal that benefits Oncor and its customers", Oncor chief executive officer Bob Shapard said in an email early Sunday that was distributed by a company spokesman.

Prior to Berkshire, there were two earlier attempts to acquire Oncor, both rejected by the PUC. Oncor's general counsel, Allen Nye, will become Oncor's CEO. There was Berkshire Hathaway's offer last month.

In May 2016, an $18 billion deal to buy Oncor led by Dallas billionaire Ray Hunt fell apart over regulatory concerns. Regulators failed to accept that the NextEra transaction was in the public interest - a requirement for the deal.