New York-based Elliott Management Corp. is planning to challenge Warren Buffett’s bid for the bankrupt parent of Texas power transmitter Oncor.
Several news outlets are reporting that Elliott Management, the largest creditor of Oncor, on Monday said it has proposed a bid worth $18.5 billion, including debt for the power transmitter.
On July 6, Warren Buffett’s Berkshire Hathaway said it wanted to purchase Oncor for $9 billion, one of his biggest acquisitions. Buffett’s offer would assume the debt.
Last year, Berkshire completed its biggest acquisition in its history, a $32.36 billion deal for aviation parts maker Precision Castparts.
Oncor serves about 10 million people and is the biggest regulated utility in Texas. Its parent company, Energy Future Holdings Corp., entered bankruptcy in 2014 facing more than $40 billion in debt after energy prices plunged.
Berkshire Hathaway will acquire a reorganized Energy Future, ultimately leading to the buyout of Oncor, based in Dallas.
Berkshire Hathaway is hardly the first company to attempt an acquisition of Oncor. In April Texas regulators rejected a proposed $18 billion sale of Oncor to NextEra Energy Inc. That price tag included debt, which may also double the enterprise value of the deal that Buffett is attempting to cobble together.
The regulators failed to accept that the NextEra transaction was in the public interest — a requirement for the deal. A buyout attempt last year backed by the Ray Hunt family of Dallas also faltered.
Berkshire Hathaway already has a significant presence in Texas, which includes headquarters for BNSF Railway Co., Acme Brick Co., Justin Brands Inc., McLane Co., Berkshire Hathaway Automotive, Star Furniture Co., TTI Inc., Charter Brokerage, LiquidPower Specialty Products Inc. and Allie Beth Allman & Associates.
Energy Future Holdings was formed by KKR &Co., TPG Capital and Goldman Sachs Capital Partners.
Chicago-based Kirkland & Ellis LLP advised Energy Future Holdings Corp. on its agreement with Berkshire Hathaway Energy