Oncor No Great Loss for Buffett
The richly-priced deal would've been dilutive to Berkshire Hathaway Energy's earnings in the near-term -- though the firm should receive its $270 million negotiated breakup fee.
As though wide-moat-rated
That bidder turned out to be
While Sempra looks to have the support of EFH's debtors, the same bankruptcy court that was expected to appraise Berkshire's bid today would need to sign off on the takeover, as would Texas regulators. It will be interesting to see how all this unfolds, given that Sempra is now the fourth party to reach an agreement with Oncor's bankrupt parent to purchase these assets, with the first two offers--from Hunt Consolidated and NextEra--being shot down by the Texas regulators. In the meantime, Berkshire should be eligible to receive the $270 million breakup fee it negotiated as part of its bid.
As we viewed the deal as rich in the first place, noting it would have been dilutive to Berkshire Hathaway Energy's earnings in the near term, it's not such a big loss for Berkshire. Still, Oncor would have provided the insurer with another avenue for capital deployment at a time when the company has too much cash on hand and not enough good ideas to put it to work in. We are leaving our overall fair value estimate for Berkshire intact at $290,000 ($193) per Class A (B) share.
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