Berkshire Trying Oncor Takeover in Texas Where Others Failed
Berkshire Hathaway Inc. Buffett is seeking to acquire utilities in Texas, where energy giant NextEra Energy Inc. and the hunting family failed.
The Berkshire Hathaway power unit has agreed to buy a new TXU Energy Corp., the parent company of Oncor Electric Delivery Co.,
Texas’s largest electric power transport operator, according to a statement on Friday. The cash offer by Future Energy is 9 billion, which implies a loan worth approximately 11.25 billion for 100% of Oncor, according to the statement.
Berkshire will be the third company to come before Texas regulators to seek permission for the purchase of a public service that have so far been highly watched. Not a week, the State rejected NextEra’s offer 18 billion to buy Oncor for the third time, the decision of the merger was not in the public interest. Last year an offer from Hunt Consolidated Inc. was canceled.
Meanwhile, an acquisition is the key to ending the bankruptcy of TXU Energy, formed by KKR & Co., TPG Capital and Goldman Sachs Capital Partners in the largest acquisition of the history drawn. The company has been working since 2014 to restructure $ 50 billion in debt.
The Berkshire deal, which should be completed in the fourth quarter, is subject to closing conditions, including state, federal and bankruptcy approvals, the two companies’ statement.
Under the deal, Bob Shapard will become Oncor’s chief executive officer, while Allen Nye will be the CEO.
Berkshire has managed to “improve the operations of some large utility companies that supported maintaining relatively stable prices for customers,” said Jim Shanahan, an analyst with Edward Jones, adding that regulators “appreciate” the company’s ownership. Oncor said “capital would make virtually unlimited” as part of Berkshire.
A Berkshire deal has not come as a surprise to analysts since the company was identified as the top contender for last year’s profit.
Buffett’s company has pushed deeper into the utility industry for the past decade and a half, regularly acquiring utilities, pipelines, and renewable energy projects in North America.
In 2013, Berkshire has agreed to a $ 5.6 billion deal for Nebraska-based Omaha-based NV Energy Inc., Berkshire, has been able to obtain approvals and terminate the NV Energy acquisition in less than seven months.
Buffett said he liked to own public services because they provide a way to invest billions of dollars at a reasonable rate of return.
Energy company does not pay a dividend in Berkshire, which means that the unit can use profits to improve infrastructure and buy other utilities.