Sempra Energy beats out Buffett for Oncor in $9.45 billion deal

Industries Dow Jones Newswires

Sempra Energy has reached a deal to buy Oncor for $9.45 billion after swooping in to snatch the power-transmission company away from Warren Buffett's Berkshire Hathaway. 

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Sempra clinched the deal Sunday after raising an earlier offer of $9.3 billion, according to people familiar with the matter. Berkshire, which last month sealed a deal to buy Oncor for $9 billion, had earlier indicated it wouldn't raise its offer amid opposition to its proposal. 

The new deal, which could be announced imminently, is expected to win the support of Elliott Management Corp., a key investor that was seeking to block the Berkshire deal, some of the people said. It would make Sempra the fourth party to reach an agreement with Oncor's bankrupt parent, Energy Future Holdings, as two earlier deals were blocked by Texas regulators. 

A bankruptcy judge would need to sign off on the Sempra takeover, as would Texas regulators. Berkshire's deal was scheduled to go before the judge in Delaware on Monday. 

The Wall Street Journal reported Friday that there was a new bidder for Oncor; Bloomberg later reported it was Sempra. 

The new agreement would be the latest twist in the long-running saga of Energy Future, formerly TXU, which was the biggest buyout in history but ran into trouble with a heavy debt burden. The company has been trying to sell its 80% stake in Oncor, its crown jewel, to pay back creditors. 

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Sempra owns San Diego Gas & Electric and Southern California Gas and has a market value of about $30 billion, much smaller than cash-rich Berkshire. Mr. Buffett is well-known for refusing to engage in bidding wars. 

Elliott had amassed the biggest position in Energy Future debt and last week bought a small set of bonds from Fidelity Investments that essentially gave it a blocking position for any deal. The activist had objected to Berkshire's deal from the day it was announced. The hedge fund had been attempting to assemble a group to mount a competing transaction. 

Berkshire's deal had surprised Elliott. But Elliott was aware of the Sempra bid and last week its lawyers disclosed the offer's existence, without saying who made it, in a court hearing. 

Mr. Buffett has been eager for big deals to spend his nearly $100 billion cash position, and energy has been a key target in recent years. Berkshire Hathaway Energy, the subsidiary that made the Oncor bid, is run by Greg Abel, who is considered a leading candidate to succeed Mr. Buffett. 

The Berkshire deal includes a $270 million breakup fee, but Elliott has also challenged that in bankruptcy court. 

--Nicole Friedman contributed to this article. 

Write to Dana Mattioli at dana.mattioli@wsj.com and David Benoit at david.benoit@wsj.com