Breakingviews: Fine Print in Sempra’s Energy Deal Bears a Close Examination

Breakingviews: Fine Print in Sempra’s Energy Deal Bears a Close Examination

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Sempra Energy has reached a deal to buy Energy Future Holdings for $9.45 billion.

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Mike Blake/Reuters

Sempra Energy’s $9.45 billion deal to buy Energy Future Holdings and its 80 percent stake in Oncor, a Texas electricity provider, bears a close read of the fine print.

Sempra, the $29 billion power company, is the fourth to make an offer for the business over the last two years. Its bid bests Warren E. Buffett’s Berkshire Hathaway energy division for the bankrupt utility and gives hedge fund Elliott Management a sweeter deal. But the transaction looks rushed and leaves Sempra with outside partners and limited control.

The deal came together in the wee hours Sunday night, just before Energy Future’s bankruptcy judge was to decide Monday whether he would approve a lower offer from Berkshire. Elliott, the largest creditor in one of the company’s main impaired classes of debt, had said it would reject Berkshire’s deal.

The hedge fund’s opposition created an opening for Sempra, albeit one that forced a proposal to beat the judge. Sempra, which owns an electricity provider and transmission utility in California and assets in South America, has checked boxes that other bidders have not. It looks, for example, to be providing an independent board structure that NextEra, a previous Oncor bidder, would not agree to. And it appears to have Elliott’s blessing, which ought to make the regulatory and bankruptcy process more manageable than previous bidders faced.

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