Sempra Energy (NYSE:SRE) has announced plans to buy power transmission company Oncor for $9.45 billion in cash.
In buying Oncor, which is 80 percent owned by Energy Future Holdings Corp, Sempra Energy will $9.35 billion of the company’s debt. Energy Future entered bankruptcy in 2014.
The energy company said in a statement when 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.”
Sempra Energy’s bid of $9.45 billion has upped the offer from Berkshire Hathaway (NYSE:BRK.A), who offered $9 billion for Oncor. Berkshire issued a statement last week saying it had no plans to raise its offer for Oncor.
“It’s not just a question of what you’re offering – it’s a question of whether or not it’s going to make Texas regulators feel comfortable enough to allow the deal,” said Paul Patterson, a utilities analyst at Glenrock Associates LLC in New York.
“And we’ve already seen two fail in this situation.”
This will be Sempra’s largest acquisition since it was formed in 1998. The deal will mean the group is expanding its US utility territory beyond California.
The company runs power and gas utilities in Southern California, Chile and Peru reach to over 32 million customers. They own and operates nearly 2,400 megawatts of renewable energy capacity with the Mexico pipeline developer IEnova.
The deal is expected to close in the first half of 2018, however, it still needs the approval of the Public Utility Commission of Texas, the U.S. Bankruptcy Court of Delaware, the Federal Energy Regulatory Commission and the U.S. Department of Justice.
When the deal is completed, the Oncor Chief Executive Bob Shapard will become executive chairman of Oncor’s board.
Shares in Sempra Energy rose by 1.9 percent Monday, the highest rise in shares since March 2015.