NextEra agrees to buy Texas electric giant Oncor for $18.4B

Florida power provider NextEra Energy said Friday that it had reached a deal to acquire an 80% stake in Texas transmission company Oncor Electric Delivery in a deal that will help resolve a massive energy bankruptcy.

Energy Future’s boom-to-bust saga started almost a decade ago when a group of private-equity firms, including KKR & Co., TPG and Goldman Sachs Group, bought the old TXU Corp. for $32 billion plus $13 billion in assumed debt in a deal that closed October 10, 2007, the day before the Dow Jones Industrial Average hit its prerecession peak of 14,164. The deal, which awaits the approval of the bankruptcy court, will be filed as part of Energy Future’s restructuring plan. The statement said the deal implies a total enterprise value of $18.4 billion. FPL is an electric utility engaged primarily in the generation, transmission, distribution and sale of electric energy in Florida.

When NextEra announced it was interested, Energy Future invited other offers. “Texas is an even bigger opportunity to do that”. “For instance, the anticipated disclosure of the specific breakdown between cash and NextEra common stock to be provided to EFH and EFIH creditor classes will be closely scrutinized”.

“It’s part of the wave of mergers and acquisitions that we’ve seen and the desirability of regulated assets in this low-priced financing environment”, Paul Patterson, a New York-based analyst at Glenrock Associates, said Friday.

The deal would eliminate all Energy Future Holdings debt hovering about Oncor. Hunt wanted $250 million in tax savings to instead go to paying Energy Future Holdings creditors. “We are proud to own and operate one of the most efficient, reliable and low-cost utilities in the nation, providing a value proposition for our customers that includes electric bills that are among the nation’s lowest, high reliability and award-winning customer service”. Robo referenced the company’s “deep operating expertise in Texas and across the nation”. That deal, valued at about $19 billion, fell apart in May when Texas regulators ruled that certain special tax benefits associated with the investment structure would have to be shared with the utility’s customers.

NextEra, which already has sizable footprint in Texas, said Oncor would keep its name, Dallas headquarters and local management.