PURE POWER PLAY
Warren Buffett loses bidding war for Texas utility
Warren Buffett just got an unpleasant jolt — losing a multibillion bid to scoop up a bankrupt Texas energy giant.
In a surprise turn of events, the folksy billionaire’s $9 billion bid for Dallas-based utility Oncor was trumped by a $9.45 billion offer from Sempra Energy, a San Diego, Calif.-based natural gas behemoth, according to reports.
The development represents a rare blow for Buffett, who avoids bidding wars for companies and had swooped in two months ago to buy Oncor after two previous attempts by Energy Future to sell it were blocked by Texas regulators.
Energy Future’s board decided to make the switch on Sunday after Sempra also offered assurances it could get its acquisition of Oncor approved by Public Utility Commission of Texas, as well as a US bankruptcy judge, the sources told Reuters.
Berkshire offered to allow Energy Future to keep an Oncor dividend, but that proposal was not enough to bridge the gap in price, the sources added.
The sources asked not to be identified because the decision has not yet been officially announced. Sempra, Oncor and Berkshire did not immediately respond to requests for comment.
Hedge fund Elliott Management, which is Energy Future’s biggest creditor, had opposed the sale to Berkshire, arguing it undervalued Oncor and threatening to veto the deal. Elliott had also been trying to put together its own bid for $9.3 billion to buy Oncor.
Elliott, controlled by billionaire Paul Singer, has indicated it would support Oncor’s sale to Sempra, one of the sources said.
In the event that Sempra didn’t prevail, sources told The Post that Elliott had been an- gling for a legal showdown on Monday to block Buffett’s bid, with plans to accuse one of the company’s directors in a Delaware courtroom of being conflicted on the deal, sources told The Post.
Specifically, Singer’s hedge fund had planned to call the in- dependent director at Oncor’s parent company as a witness on Monday, grilling him over his cozy connections with Kirkland & Ellis, the whiteshoe law firm that had orchestrated Buffett’s deal to buy Oncor, according to sources briefed on the plans.
Singer was hatching his theatrical legal ploy on the heels of a surprise maneuver on Friday, when his lawyers told Delaware Judge Christopher Sontchi that yet another challenger to Buffett had entered the fray with a $9.3 billion bid for Oncor — a bidder that turned out to be Sempra.
Oncor execs and Texas regulators alike had thrown their support behind Buffett’s allcash deal. Heightening the drama, Buffett last week publicly declared that if his $9 billion bid wasn’t approved by the judge on Monday, he’d walk away from the deal the next day.
Sources said it’s likely the board took Buffett at his word, as the Omaha-based investor has repeatedly told his investors he won’t get pulled into bidding wars for assets.
Indeed, on one rare occasion when Buffett did up his bid, he raised it to $35.05 a share from $35 a share when he bought Mid-American Energy in 2000 — quipping afterward that the company’s bankers had “wrung the last nickel” from him.