On Friday, Warren Buffett’s Berkshire Hathaway, Inc. (NYSE: BRK.A) declared that it would pay $9 billion to pick up Oncor Electric Delivery Co, a parent of Texas power transmission company from bankruptcy to carry on the steady returns in utilities. This all cash deal would involve Berkshire’s ownership of one of the largest U.S. electricity transmission companies with the approval by a bankruptcy judge and Texas regulators. Previously, Texas regulators declined two previous deals to sell Oncor to other companies but Buffett hopes to acquire this agreement.
Based in Dallas, Texas, Oncor delivers power to more than 3.4 million homes and businesses through about 122,000 miles of transmission and distribution lines. It is also 80 percent owned by Energy Future Holdings. In 2016, Oncor reported a $431 million profit which was also about the same amount earned 3 years prior. Berkshire Hathaway Energy however, typically generates almost 10 percent of its parent’s profit contributing $2.29 billion to an overall $24.07 billion in 2016.
Texas’ Public Utility Commission (PUCT) is required by law to rule on Berkshire’s bid within six months of receiving an application. They expect Friday’s purchase to close in the fourth quarter with pending approvals by state and federal regulators and the judge overseeing Energy Future’s bankruptcy proceedings. This deal would have an equity value of about $11.25 billion for Oncor.