Author Topic: BRK: Oncor Acquisition  (Read 8766 times)

longinvestor

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Re: BRK: Oncor Acquisition
« Reply #50 on: August 19, 2017, 04:28:37 AM »
There will be a court ruling on the Berkshire offer on coming monday, right? I have somehow more or less lost track of the important dates in this potential deal, tried to find it by going back in this topic.
Yes, August 21 is the court date.

Berkshire has laid out their case on what this means for the future of Oncor. There's nothing like that from anyone else in the sense of what's good for Texas over the long term. They will move on, in actuality, they are telling the vultures that they're not interested in talking to them at all. Berkshire Hathaway energy is curating this rate payer friendliness across the US and that's driving some financial folks crazy. It comes down to long term versus short term investing horizon. We will hear some commentary on this from Omaha in the coming years. I actually spent hours talking to the BHE folks at their booth at the AGM. The mantra I heard was "It's all for the rate payers". The game they are playing has few rivals. Berkshire is paving the way to deploy 100's of billions. There will be more Oncors in the future.
« Last Edit: August 19, 2017, 06:32:15 AM by longinvestor »


John Hjorth

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Re: BRK: Oncor Acquisition
« Reply #51 on: August 19, 2017, 09:01:33 AM »
Berkshire has laid out their case on what this means for the future of Oncor. There's nothing like that from anyone else in the sense of what's good for Texas over the long term. They will move on, in actuality, they are telling the vultures that they're not interested in talking to them at all. Berkshire Hathaway energy is curating this rate payer friendliness across the US and that's driving some financial folks crazy. It comes down to long term versus short term investing horizon. We will hear some commentary on this from Omaha in the coming years. I actually spent hours talking to the BHE folks at their booth at the AGM. The mantra I heard was "It's all for the rate payers". The game they are playing has few rivals. Berkshire is paving the way to deploy 100's of billions. There will be more Oncors in the future.

Thank you for sharing this, longinvestor.

In the United States a company can stay under creditor protection for a very long time in certain cases.  W.R. Grace, a company that made Ted Weschler very wealthy, was in bankruptcy for something like 12 years.  That said - it costs a lot in professional fees and other expenses and these failed deals have breakup fees (like quarter billion dollar break fees) - and all the money spent on that type of stuff reduces the amount available for creditors.  And since Oncor is completely "ring-fenced," it's not like time is on creditors side with a profitable business paying dividends up to the bankrupt parent.  Oncor can go up in value over time, which might help get a higher price - but it won't send cash up to the EFH entities until it is sold.

Ultimately, Berkshire Energy is betting that their deal is the only deal that gets by regulators and Elliott is betting that they can bluff BRK into raising.  Elliott is extremely unlikely to come up with a deal that wins over regulators - but we will see...
+1 ..It's a bluff to try and squeeze Berkshire to pony up a bit more. Given that this has been playing out for four years already, time is not on Elliott's side. Oncor has already come out saying that should this deal fall through, any future offers from Berkshire would likely be for less than this time.

Who knows, Buffett may relent and pony up a nickel more as an act of good faith, and can say "They wrung out the last nickel from us" and Elliott goes away happy(not).
I don't think that BRK ponies up anything more. This is not just about value it's about setting precedent. BRK would rather walk away than pay more because if they pay more they'll have a bunch of Elliott types trying to vulch on all they're future deals.

The nickel thing was for Mid-American and that was a transformative acquisition for BRK and I bet they really wanted it. Oncor is no such thing.... so not even a nickel.

After thinking about this carefully, in perspective of Berkshire's future deals and the way Berkshire in general is doing its deals, I agree with it in full, and I also consider it very important.

- - - o 0 o - - -

So, an Oncor deal monday, or no Oncor deal at all.

Thank you all.
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villainx

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Re: BRK: Oncor Acquisition
« Reply #52 on: August 19, 2017, 07:34:17 PM »
I don't see any harm in raising the offer if it makes sense.  Not raising the offer for future deals or principle is just silly.  Buffett and Berkshire are investing, as long as it makes sense, if they had too, which is not saying they have to, raising the offer by a little isn't the end of the world.

This is also against the backdrop that Berkshire has a ton of cash and they expressed numerous times that they were glad to pay up or were too strict on sticking to a price.  The cash shouldn't compel them to burn a pocket hole, but it's still there nonetheless.
« Last Edit: Today at 07:02:24 AM by villainx »