For Buffett, No Oncor And No Breakup Fee -- WSJ

By Nicole Friedman Features Dow Jones Newswires

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (August 25, 2017).

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

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.

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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.

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 25, 2017 02:47 ET (06:47 GMT)