Return On Warren Buffett's Attempt To Buy Oncor: Zero

By Nicole Friedman Features Dow Jones Newswires

Warren Buffett has nothing to show for his attempt to buy one of the country's largest power-transmission companies.

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Berkshire Hathaway Inc.'s bid to buy Texas power-transmission company Oncor fell through too fast for Mr. Buffett's firm to get its $270 million breakup fee.

Berkshire and Oncor's bankrupt parent company, Energy Future Holdings Corp., reached a $9 billion deal last month that included the breakup fee. But the deal and its terms still needed approval from a bankruptcy judge. Hours before a scheduled court hearing, Energy Future terminated the deal in favor of a higher bid from Sempra Energy.

"It's a large cost certainly to Berkshire, in the time and effort put in which is not resulting in any return," said David Kass, a professor at the University of Maryland's Robert H. Smith School of Business and a Berkshire shareholder. "But [Mr. Buffett's] main concern would have been his expected rate of return over time from his $9 billion price, and he wasn't willing, of course, to go any higher from that."

Berkshire Hathaway Energy, the subsidiary that made the bid, didn't immediately respond to a request for comment.

Breakup fees are a common element in many corporate acquisition attempts. Berkshire earned a $175 million breakup fee after it withdrew its offer to buy Constellation Energy Group Inc. in 2008. Berkshire also reaped investment gains from its Constellation stake.

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In 2003, Berkshire withdrew its offer to buy Burlington Industries after a bankruptcy court didn't approve a breakup fee.

Mr. Buffett has bet unsuccessfully on Energy Future before. Berkshire lost $873 million pretax on high-yielding Energy Future bonds that it bought in 2007, Mr. Buffett said in his 2013 letter to shareholders.

Write to Nicole Friedman at nicole.friedman@wsj.com

(END) Dow Jones Newswires

August 24, 2017 16:53 ET (20:53 GMT)