Warren Buffett must beat out hedge fund king in Oncor bid
Warren Buffett hates to fight. Paul Singer lives by it.
Now the two billionaires have crossed paths in pursuit of valuable utility from Texas.
Buffett’s Berkshire Hathaway launched an agreement for Oncor Electric Delivery that could put an end to the biggest bankruptcy of the decade.
Hedge fund Singer Elliott Management, opposes the terms of the offer of 16 billion dollars Berkshire have been established in a death-based approach.
The shock has left Buffett in a place he would rather avoid. The man of 86, who has had a friendly ambition to consolidate the firm’s acquisitions, is now facing the choice to sweeten the deal to complete a hedge fund, fight or walk.
But singer has a big stick. His fund is now the largest creditor of the bankrupt company Oncor, accumulating 2.9 billion of TXU Energy’s debt over the past few months, which gives it firepower in its attempt to torpedo an agreement according to him, not Adequately covers these debts.
And the famous disputed army Elliott prepares Buffett if he wants to go ahead with his offer.
“Whatever Berkshire Hathaway is willing to invest more money on, I have no idea,” said Oncor CEO Bob Shapard in an interview. “Will Berkshire be held just to honor and that Elliott proves they can offer a higher bid or are they going to negotiate something?”
Berkshire did not respond to requests for comments. Elliott declined to comment.
The sale of Oncor would be the last step to put an end to the relative three-year bankruptcy of Future Energy, formerly known as TXU Corp.
The end result of a leveraged purchase amortized by KKR, TPG Capital and Goldman Sachs Capital Partners.
The settlement proposed by Berkshire requires the blessing of the bankruptcy court. Elliott presents the diagram of an offer worth more than Buffett $ 300 million.
Any increase in the cash price directly benefits the younger bonds, which are largely made by Elliott, according to Shapard.
Buffett has moved away from offers that have faced resistance.
This year, Berkshire and 3G Capital have agreed to set up $ 15 billion to support Kraft’s Heinz Unilever offer, only on the basis of a “friendly” agreement, Buffett said in May at its annual meeting.
When Unilever said the offer had undervalued the company, the billionaire and his partner stopped the search.
However, despite its high reputation, it can sometimes cause a problem.
In 2011, Berkshire tried to break an agreement, making an unsolicited $ 3.25 billion bid for Transatlantic Holdings, which had agreed to be bought by another reinsurer. He noted in a letter in 2016 that some hostile offers are justified.
Berkshire Hathaway Warren Buffett announced an agreement to acquire Oncor Electric Delivery, the Dallas-based utility that maintains power lines in North Texas.
“There are many examples of Warren Buffett who does things differently than he described,” said Meyer Shields, an analyst at Keefe, Bruyette & Woods. “He did everything he could to make money for himself and for our shareholders.”