Elliott Hedge Fund Seeks to Challenge Buffett’s Bid for Energy Company
The hedge fund Elliott Management is hoping to block Warren E. Buffett’s $9 billion takeover bid for Energy Future Holdings, the bankrupt Texas power giant, by working on an even higher offer.
Elliott, the biggest creditor to Energy Future, on Monday published correspondence with the utility operator that included descriptions of an alternative takeover bid that it was working on, which carried a price of about $9.3 billion.
All told, the hedge fund wrote in a July 5 letter to Energy Future, such a plan — if it came together — would value the company and its prized Oncor utility at $18.5 billion, including assumed debt. The takeover bid from Mr. Buffett’s Berkshire Hathaway, which Energy Future accepted on Friday, carried a total enterprise value of roughly $18 billion.
A spokesman for Elliott declined to comment beyond the public materials. Oncor did not immediately respond to a request for comment.
The disclosures by Elliott highlight a brewing battle between billionaires. On one side is Paul E. Singer, the founder of Elliott, which began buying Energy Future debt last fall and now says it is the company’s biggest creditor with $2.9 billion in holdings.
On the other is Mr. Buffett, whose Berkshire Hathaway Energy emerged as the power company’s white knight after its nearly decade-long struggle to reorganize its finances.
Energy Future, once known as TXU, was taken private in 2007 for $45 billion in what was the biggest leveraged buyout ever at the time. But the ill-starred deal was struck at the beginning of the credit crisis, and the mountain of debt required to finance the transaction became a millstone around the company’s neck.
The company filed for bankruptcy in 2014 and has struggled to emerge amid disputes with creditors and Texas power regulators, who rejected two previous takeover bids.
Now Elliott is pressing to halt Berkshire’s takeover effort, using its weight as a major creditor in an attempt to block the deal in bankruptcy court.
In the July 5 letter, Elliott officials complained to Energy Future that they had heard rumors of a potential deal with Mr. Buffett and demanded to have a seat at the negotiating table.