Sempra Energy's Oncor offer bested the $9 billion in cash Berkshire Hathaway put forward before facing resistance from creditors in bankruptcy court. The company said it would own about 60 percent of Oncor under the deal, which would include financing from megabanks RBC Capital Markets and Morgan Stanley. Oncor holds the Texas energy transmission assets of bankrupt giant Energy Futures Holdings. Shortly after, billionaire investor Paul Singer's Elliott Management Corp. fired back, saying it was working to pull together a rival bid that may total $9.3 billion.
"We are disappointed our agreement to acquire Oncor has been terminated", Greg Abel, the chief executive officer of Berkshire's energy unit, said in a statement.
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".More news: Muguruza downs No. 1 Pliskova to reach Cincinnati final
A deal for Oncor is key to ending the bankruptcy of its parent, which has been restructuring nearly $50 billion of debt for more than three years.
In 2014 EFH, which was the 2007 product of the largest ever leveraged buyout, filed for bankruptcy after years of struggling against the shale boom, which drove down prices for electricity as well as gas.
The deal is subject to approvals from Texas utility regulators as well as a bankruptcy court overseeing the three-year old EFH proceeding, one of the largest bankruptcies ever. Sempra has about 32 million customers in the U.S. and Mexico and employs about 16,000. NextEra sought to rework Oncor's ringfencing provisions to give it access to dividends from the regulated utility, but regulators balked at both attempts.More news: New Orleans Saints fire orthopedists after misdiagnosis of Delvin Breaux injury
In May 2016, an $18 billion deal to buy Oncor led by Dallas billionaire Ray Hunt fell apart over regulatory concerns. The regulatory commitments were included in an agreement that was signed by five significant parties that supported the proposal.
Sempra said in its statement announcing the deal that it "will maintain the existing independence of Oncor's board of directors, which has protected Oncor and its customers during the ongoing Energy Future bankruptcy".
When Energy Future was formed 10 years ago, utility commissioners insisted on a financial and corporate ring fence around Oncor to keep bankruptcy from dragging it down.More news: LTFRB allows Uber to file second appeal
"It is important for Oncor to remain financially strong", Reed said. Allen Nye, now Oncor's general counsel, will succeed Shapard as Oncor CEO. There was Berkshire Hathaway's offer last month.