Warren Buffett wants to expand his energy business with a billions of dollars. Berkshire Hathaway, the investment conglomerate controlled by the world’s best investor, announced on Friday the acquisition of the insolvent group Energy Future Holdings (EFH), which includes the largest Texan electricity provider Oncor. The purchase price for the umbrella company, which is still under massively complex bankruptcy, amounts to $9.0 billion (€7.9 billion) in cash.
Pursuant to the terms of the deal, Oncor’s CEO Robert S. Shapard, would become executive chairman of the new company and general counsel Allen Nye will get the role as CEO.
The deal would value the equity of Oncor, in which Energy Future owns an 80 percent stake, at $11.25 billion.
EFH did not provide any information on the amount of liabilities assumed. The planned takeover received a muted response on the stock exchange, Berkshire shares hardly changed in the US trade. The Buffett company had already been traded as an Oncor potential buyer.
What is exciting now is whether the supervisory authorities agree to the takeover. Two other companies were already interested in Oncor before Buffett’s investment firm. Both wanted to buy only Oncor and not the insolvent company since 2014 and did not get the approval of the supervisory authorities among other things.
Since the Omaha, Nebraska-based conglomerate Berkshire Hathaway has also been invested in some companies in Texas, and the investment company’s energy division has earned a good reputation in other acquisitions, Buffett is given a good chance to get the approval of the authorities. Berkshire Hathaway expects the takeover to be completed in the fourth quarter.
The transaction would first need approval from a federal bankruptcy court that’s looking after the reorganization of Energy Future. It would also need green light from the Public Utility Commission of Texas, which had not accepted Florida utility owner NextEra’s attempt to takeover Oncor earlier this year.
It would be the most expensive deal for Buffett’s company since the purchase of US Precision Castparts in August 2016 for about $37 billion. “We are pleased to work with Texas and Shareholders to ensure Oncor remains a strong power provider,” said Greg Abel, head of Berkshire Hathaway’s energy business.
“Oncor is an excellent fit for Berkshire Hathaway, and we are pleased to make another long-term investment in Texas,” Buffett said in the statement. “When we invest in Texas, we invest big!”
