Sempra is said to be near deal to acquire Oncor Electric

[NEW YORK] Sempra Energy is nearing an agreement to buy Oncor Electric Delivery Co for about US$9.45 billion, according to a person familiar with the matter, putting it in line to scoop up the Texas utility also being pursued by Berkshire Hathaway Inc and Paul Singer's Elliott Management Corp. 

The offer is a combination of equity and debt, the person said, asking not to be identified because the information is private. Sempra is comfortable with conditions that Berkshire Hathaway has already agreed to, including ringfencing measures to protect Oncor's credit rating and preserve control of its board, that are seen as key to winning the support of Texas regulators, the person said.

The proposal from Sempra is slated to be discussed at a Monday hearing of the court handling the bankruptcy of Oncor's parent company Energy Future Holdings Corp, the person said. Representatives from Sempra, Elliott and Berkshire Hathaway's energy unit declined to comment. An Oncor representative didn't immediately respond.

Sempra, which had earlier been discussing a price tag of about US$9.3 billion, is the latest in a long line of suitors seeking to take over Oncor since Energy Future declared bankruptcy in 2014. A deal would be Sempra's largest since at least 1997, according to data compiled by Bloomberg, and expand the company's US utility territory beyond California.

San Diego-based Sempra is the mystery bidder that was mentioned at an Aug 18 bankruptcy hearing, according to people familiar with the matter. Berkshire had offered US$9 billion, while Elliott had been working on a bid that may total US$9.3 billion.

An agreement for Oncor is key to ending the bankruptcy of Energy Future, which has been restructuring almost US$50 billion of debt for more than three years.

Dallas-based Oncor serves almost 10 million customers and operates more than 170,590 kilometres of distribution lines. Energy Future's earlier efforts to sell the firm have failed.

Texas utility regulators this year quashed a NextEra Energy Inc offer valued at US$18.4 billion including debt, after the utility giant refused to accept measures to protect Oncor's credit. A group led by Hunt Consolidated Inc dropped a bid last year after the state imposed conditions it found too onerous.

Berkshire Hathaway Energy said Aug 18 that it had reached an agreement with five stakeholders in Texas, including the staff at the Public Utility Commission of Texas, resolving all outstanding issues in its bid for Oncor. Ultimately, it is up to the two PUC commissioners to sign off on its bid once it is approved by the bankruptcy court. Energy Future Holdings is expected to detail its plans in court on Monday.

"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.

"While the Commission will ultimately decide, it's clear that key stakeholders who have signed the settlement agree the bid would be good for Texas." If the merger is terminated and Oncor is sold to someone else, Energy Future would be required, subject to conditions, to pay Berkshire US$270 million, Berkshire said in a regulatory filing.

BLOOMBERG