Photographer: Andrew D. Brosig/AP Photo

Berkshire and Elliott Face Rival $9.3 Billion Oncor Bid

  • Undisclosed bidder is said to be investment-grade utility
  • Berkshire, Elliott fighting for chance to buy Texas company

A mystery third bidder has emerged for Oncor Electric Delivery Co., making a $9.3 billion offer for the Texas utility to compete with rival bids by Berkshire Hathaway Inc. and Elliott Management Corp., a person familiar with the matter said.

While the offer from an investment-grade utility was discussed in a bankruptcy court hearing Friday, the identity of the new potential buyer wasn’t disclosed, the person said.

The emergence of a third suitor for Oncor intensifies a billionaires’ battle for the biggest power distributor in Texas. Warren Buffett’s Berkshire has offered $9 billion for the company while Paul Singer’s Elliott has been working to pull together a deal that may total $9.3 billion.

A deal for Oncor is key to ending the bankruptcy of its parent, Energy Future Holdings Corp., which has been restructuring almost $50 billion of debt for more than three years. Singer and Buffett are set for a showdown Monday in U.S. Bankruptcy Court in Wilmington, Delaware, that could help determine who gets to buy Oncor.

Oncor serves almost 10 million customers and operates more than 106,000 miles (170,590 kilometers) of distribution lines. Earlier efforts to sell the company have failed.

Texas utility regulators this year quashed a NextEra Energy Inc. offer valued at $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.

Energy Future was formed a decade ago by KKR & Co., TPG Capital and Goldman Sachs Capital Partners as part of the biggest leveraged buyout in history. It sought protection from creditors after natural gas plummeted, dragging down wholesale prices for the power the company was generating.

Berkshire, Elliott

Berkshire announced its bid to buy Energy Future in July. Within hours, Elliott was said to be considering a rival offer. The New York hedge fund has since criticized Berkshire’s proposal for undervaluing Oncor and won time from a bankruptcy judge last month to cobble together it’s own plan.

This week, Elliott bought debt in Oncor’s parent in an effort to block Berkshire’s bid, people familiar with that matter said. Buying the notes means Elliott and Sunrise Partners, which also opposes Berkshire’s offer valued at $18.2 billion with debt, own the majority of every class of impaired credit in the holding company, one of the people said. That might allow Elliott to block the Berkshire deal as a so-called dissenting impaired class of creditor under bankruptcy law.

The new offer was reported earlier by the Wall Street Journal.

    Before it's here, it's on the Bloomberg Terminal.
    LEARN MORE