Warren Buffet has been trying to gain control of a Texas power company for some time now, with very little luck in negotiations with challenger, the hedge fund Elliott Management Corp. But it looks like his plight just got more complicated as a new “mystery” bidder has emerged to challenge the $9 billion offer from Berkshire Hathaway, Inc. This makes three total entities looking to scoop up the Texas-based power-transmission company, Oncor.
Berkshire Hathaway’s energy unit had originally made this deal to buy Oncor for $9 billion in cash, just last month. This move would have quickly added electricity to the conglomerate’s largest business venture and, in the meantime, would partly satisfy Buffet’s seeming longing to spend some of the fund’s $99.7 of liquidity.
On the other hand, the Paul Singer-managed Elliott Management assembled its own deal, one which the fund claims is worth hundreds of millions of dollars more [than Berkshire Hathaway’s $9 billion offers] for investors. These are all the presently-known details for that bid.
The third bid—and ghostly bidder—however, emerged from the shadows, so to speak, in a late-scheduled hearing in a Wilmington, DE bankruptcy court. While the entity has not been revealed, Elliott Management Corp lawyer Keith Wofford identified the contender as a “large investment grade utility” at the hearing.
Oncor serves nearly 10 million customers, operating across more than 106,000 miles of distribution lines. The company has been on the block before, but to no avail. As a matter of fact, there was a plan to sell Oncor to a group of creditors and investors headed up by the privately-held Hunt Consolidated Inc, of Texas, but that fell through in 2016 on the heels of regulatory obstacles. And then, earlier this year, another regulator put a stop to Oncor’s potential sale to NextEra Energy Inc’s attempt.
Now, all of this is important, of course, because whatever deal goes through is going to serve Oncor’s parent company Energy Future Holdings Corp, which is trying to put an end to recent bankruptcy proceedings. In fact, Energy Future Holdings has been in the process of restructuring nearly $50 billion of debt for at least the last three years. Both Singer and Buffet are ready to go head-to-head, on Monday, in the same Wilmington Bankruptcy court.
The outcome of this case could very well determine who will win the rights to buy