San Diego based Sempra Energy $SRE on Monday said it will acquire Energy Future Holdings Corp, the indirect owner of 80 percent of Oncor Electric Delivery Company, LLC, operator of the largest electric transmission and distribution system in Texas foraround $9.45 billion in cash.
San Diego based Sempra Energy $SRE on Sunday said it will acquire Energy Future Holdings Corp, the indirect owner of 80 percent of Oncor Electric Delivery Company, LLC, operator of the largest electric transmission and distribution system in Texas foraround $9.45 billion in cash.
SRE expects to own about 60 percent of a reorganized Energy Future Holdings after the transaction that has an eneterpriose value of $18.8 billion, including Dallas-based Oncor’s debt.
The deal follows the announcent on August 5 that Sempra Energy $SRE Beat Earnings and Expect Cameron LNG Train 1 to be Delayed Until 2019
Debra L. Reed, chairman, president and CEO of Sempra Energy commented on the deal.”Both Sempra Energy and Oncor share more than 100 years of experience operating utilities that deliver safe, reliable energy to millions of customers. 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. We believe our agreement with Energy Future will help ensure that Texas utility customers continue to receive the outstanding electric service they have come to expect from Oncor and provide stability to Oncor’s nearly 4,000 employees.”
“For investors, this transaction is expected to enhance our earnings beginning in 2018 and further expand our regulated earnings base, while serving as a platform for future growth in the Texasenergy market and U.S. Gulf Coast region,” said Reed.
Sempra Energy expects to fund the $9.45 billion transaction using a combination of its own debt and equity, third-party equity, and $3 billion of expected investment-grade debt at the reorganized holding company. Sempra Energy has received financing commitments from RBC Capital Markets and Morgan Stanley. Sempra Energy expects its equity ownership after the transaction to be approximately 60 percent of the reorganized holding company.
In July the energy unit of Berkshire Hathaway agreed to buy Oncor for $9 billion. However Energy Future’s biggest creditor Elliott Management Corp opposed the sale arguing it undervalued Oncor. Berkshire said last week it would not be raising its offer for Oncor.
As part of the transaction, Sempra Energy has committed to support Oncor’s plan to invest $7.5 billion of capital over a five-year period to expand and reinforce its transmission and distribution network.
The transaction is subject to customary closing conditions, including the approval of the Public Utility Commission of Texas, U.S. Bankruptcy Court of Delaware, Federal Energy Regulatory Commission and the U.S. Department of Justice under the Hart-Scott-Rodino Act.
Sempra Energy expects the transaction to be completed in the first half of 2018. Lazard and Morgan Stanley are acting as financial advisors to Sempra Energy and, White & Case LLP, as legal advisor.
Sempra Energy plans to webcast a conference call for investors, financial analysts, news media and the general public later this week, with details to follow.
Headquartered in Dallas, Oncor is a regulated electric transmission and distribution service provider that serves 10 million customers across Texas. Using cutting-edge technology, more than 3,700 employees work to safely maintain reliable electric delivery service with the largest distribution and transmission system in Texas; made up of approximately 122,000 miles of lines and more than 3.4 million meters across the state.
Sempra Energy includes San Diego Gas & Electric, Southern California Gas Co., Sempra South American Utilities, Sempra Mexico, Sempra Renewables and Sempra LNG & Midstream. Sempra LNG & Midstream currently is developing the Port Arthur LNG liquefaction-export project on the Gulf Coast of Texas. Sempra Energy formerly owned and operated 10 power plants in the Texaselectric market and currently maintains a 200-person office in Houston to support marketing and development activities.
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