San Diego-based Sempra Energy to acquire Energy Future Holdings Corp. for $9.45 billion
SAN DIEGO (KUSI) — San Diego-based Sempra Energy announced Monday it will pay about $9.45 billion in cash to acquire Energy Future Holdings Corp., the indirect owner of 80 percent of Oncor Electric Delivery Co., LLC, operator of the largest electric transmission and distribution system in Texas.
"Both Sempra Energy and Oncor share more than 100 years of experience operating utilities that deliver safe, reliable energy to millions of customers,” said Debra L. Reed, chairman, president and CEO of Sempra Energy. "With its strong management team and long, distinguished history as Texas’ leading electric provider, Oncor is an excellent strategic fit for our portfolio of utility and energy infrastructure businesses.”
The enterprise value of the transaction is about $18.8 billion, including the assumption of Dallas-based Oncor’s debt, and represents "a major step forward in resolving Energy Future’s long-running bankruptcy case,” according to Sempra Energy.
"We believe our agreement with Energy Future will help ensure that Texas utility customers continue to receive the outstanding electric service they have come to expect from Oncor and provide stability to Oncor’s nearly 4,000 employees,” Reed said. "For investors, this transaction is expected to enhance our earnings beginning in 2018 and further expand our regulated earnings base, while serving as a platform for future growth in the Texas energy market and U.S. Gulf Coast region.”
Sempra Energy said it expects to fund the transaction using a combination of its own debt and equity, third-party equity and $3 billion of expected investment-grade debt at the reorganized holding company, in which it expects to have a 60 percent equity ownership.
"As a result of the transaction, it is anticipated that Oncor’s underlying financial strength and credit ratings will improve,” according to a Sempra Energy statement. "Sempra Energy also will maintain the existing independence of Oncor’s board of directors, which has protected Oncor and its customers during the ongoing Energy Future bankruptcy.”
Sempra Energy has committed to support Oncor’s plan to invest $7.5 billion of capital over a five-year period to expand and reinforce its transmission and distribution network, according to Reed.
Bob Shapard, Oncor’s CEO, will become executive chairman of the Oncor board of directors and Allen Nye, currently Oncor’s general counsel, will succeed Shapard as Oncor’s CEO. Both will serve on the Oncor board, which will consist of 13 directors, including seven independent directors from Texas, two from existing equity holders and two from the new Sempra Energy-led holding company.
The transaction is expected to be completed in the first half of 2018 and is subject to customary closing conditions, including the approval of the Public Utility Commission of Texas, U.S. Bankruptcy Court of Delaware, Federal Energy Regulatory Commission and the U.S. Department of Justice.
Sempra Energy formerly owned and operated 10 power plants in the Texas electric market and currently maintains a 200-person office in Houston to support marketing and development activities.