Energy Future, Berkshire Hathaway announce deal for Oncor acquisition

By Caroline Salls

Pittsburgh, July 7 – Energy Future Holdings Corp. executed a merger agreement with Berkshire Hathaway Inc. subsidiary Berkshire Hathaway Energy under which Berkshire Hathaway Energy will acquire reorganized Energy Future, which will ultimately result in the acquisition of Oncor Electric Delivery Co. LLC, according to a news release.

The all-cash consideration for reorganized Energy Future is $9 billion, implying an equity value of $11.25 billion for 100% of Oncor.

Closing of the transaction, which is scheduled to occur in the fourth quarter, is subject to the receipt of required state, federal and bankruptcy court approvals.

“Oncor is an excellent fit for Berkshire Hathaway, and we are pleased to make another long-term investment in Texas,” Berkshire Hathaway chairman Warren Buffett said in the release. “Oncor is a great company with similar values and outstanding assets.”

Oncor chief executive officer Bob Shapard said in the release, “By joining forces with Berkshire Hathaway Energy, we will gain access to additional operational and financial resources as we continue to position Oncor to support the evolving energy needs of our state.

“Oncor will remain a locally managed Texas company headquartered in Dallas.”

Upon closing of the transaction, Shapard will assume the role of executive chairman of the Oncor board, and Allen Nye will assume the role of CEO of Oncor.

“We are excited to begin the regulatory approval process as this transaction has significant support across our key stakeholders,” Nye said in the release.

As previously reported, NextEra Energy, Inc.’s application for approval for the acquisition of the equity interests in Oncor was denied by the Public Utility Commission of Texas.

Specifically, NextEra sought approval of the commission to acquire the 80% interest in Oncor indirectly held by Energy Future, as well as the 19.75% interest held by Texas Transmission Holdings Corp. NextEra also agreed to purchase a 0.22% interest in Oncor held by Oncor Management Investment LLC.

The NextEra transaction was part of Energy Future’s eighth amended plan of reorganization, which was confirmed on Feb. 17.

In its April order denying approval of the acquisition, the commission said “the expansive and diversified structure of NextEra Energy and its affiliates would subject Oncor to new and potentially substantial risks.”

The commission said Oncor would be required to support about 15% of the $45 billion of consolidated NextEra Energy debt.

Energy Future is a Dallas-based power generation company and utility operator. The company filed for bankruptcy on April 29, 2014. The Chapter 11 case number is 14-10979.

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