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Texas Commission Okays Sempra’s (SRE) Oncor Acquisition

Sempra Energy recently cleared the final regulatory red tape in its acquisition of Oncor, following the receipt of the Public Utility Commission of Texas’ (“PUCT”) approval for the deal. PUCT’s sanction is a significant milestone achieved by the company as it will facilitate the completion of the pending Energy Future Holdings Corp. (“EFH”) buyout, the parent company of Oncor.

What’s the Deal?

In August 2017, Sempra Energy announced that it is set to buy EFH and in turnTexas’ electrical grid giant Oncor Electric Delivery Company, LLC (Oncor) as well. Including Oncor’s debt, the enterprise value of Sempra’s proposed offer for the Oncor buyout is $18.8 billion.

Notably, the company aims at acquiring 80% ownership of Oncor. Per the terms, Sempra Energy will maintain the existing independence of Oncor’s board of directors, on completion of the transaction.

Impressively, per media sources, Sempra Energy practically snatched away Oncor from Warren Buffet’s Berkshire Hathaway Inc. that has been bidding for this regulated utility since July 2017.

Synergies from the Acquisition

The deal will add Texas’ largest electric transmission and distribution provider to Sempra Energy’s portfolio, thereby expanding its market in the state where it currently operates only 10 power plants. Apart from expanding the company’s regulated earnings base, this deal will boost Sempra Energy’s future growth in the Texas energy market and U.S. Gulf Coast region.

Meanwhile, management at Sempra Energy believes this transaction will enhance the company’s business mix and provide increased and more geographically diversified utility earnings.

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