Berkshire Hathaway Said to Be Among Leading Oncor Biddersby and
Warren Buffett’s Berkshire Hathaway Inc. submitted a bid for Energy Future Holdings Corp.’s Oncor Electric Delivery Co., people familiar with the talks said, joining NextEra Energy Inc. as a top contender to buy Texas’ biggest transmission operator.
Energy Future is mulling offers that value Oncor at about $18 billion, according to the people, who asked not to be identified because the information is private. The process is fluid and the leading bidders have switched places several times, the people said.
“Buffett has been clear that he likes infrastructure plays in general and he likes utilities,” Kit Konolige, a utility analyst at Bloomberg Intelligence in New York, said by phone.“They have stable cash flows and they pay dividends. He would appear to believe they are not going away anytime soon.”
Energy Future said in a bankruptcy court filing July 8 that it was in talks with multiple interested parties, without elaborating further. The company had aimed to reach a deal by that date, people familiar with the talks said, because of a court deadline to submit an updated plan for the disposition of the side of its business that includes Oncor. Instead, it asked the court to suspend the deadline as it continues talks.
Edison International is among other parties that have explored buying Oncor, people familiar with the talks have said. A group led by Borealis Infrastructure Management -- an investment arm of Canada’s OMERS pension plan -- and Singapore’s GIC Special Investments, which together hold a 19.75 percent stake in Oncor, has expressed interest in acquiring the entire company, the people said. The group agreed to buy the minority stake from Energy Future in 2008 for $1.25 billion.
Representatives of the Borealis/GIC group have requested a meeting at the end of the month with Geoffrey Gay, an attorney involved in the Oncor sale process who represents ratepayers, Gay said by phone. The meeting was requested through Oncor, Gay said, adding that he hasn’t yet been told the purpose of the discussion. Lawyers for NextEra also requested a meeting with Gay, he said.
Representatives for Oncor, Energy Future and NextEra declined to comment, as did a spokeswoman for Berkshire’s energy unit. A representative of Borealis didn’t immediately respond to a request for comment.
Buffett’s company entered the power industry in 2000 when it led a group purchasing MidAmerican Energy Holdings Co. for about $9 billion including debt. Since then, the business has acquired power companies, pipelines and transmission systems throughout North America. The unit was renamed Berkshire Hathaway Energy in 2014.
Dallas-based Energy Future is holding negotiations after a plan to sell the power utility to a group led by Hunt Consolidated Inc. unraveled. Oncor’s takeover is seen as key to Energy Future’s emergence from bankruptcy after restructuring almost $50 billion in debt.
The Hunt group withdrew its application to buy Oncor in May, saying some of the buyers wouldn’t sign off on terms set by the Public Utility Commission of Texas, including one that could have required them to share potential tax savings with the utility’s ratepayers. Hunt later sued the commission, and it continues to mull a new proposal for Oncor.
“It is no surprise that other parties are participating in this contest, but we are working with all stakeholders to maintain our position as a very viable option for Oncor, its employees, customers and the PUCT," Jeanne Phillips, a spokeswoman for Hunt, said in an e-mailed statement.