Author Topic: BRK: Oncor Acquisition  (Read 26275 times)

Valuehalla

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« Last Edit: July 07, 2017, 03:55:36 AM by Valuehalla »
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ScottHall

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Re: BRK: 17,5 B Oncor Acquisition
« Reply #1 on: July 06, 2017, 07:24:07 PM »
Seems like a smart buy.

John Hjorth

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Re: BRK: 17,5 B Oncor Acquisition
« Reply #2 on: July 07, 2017, 02:47:20 AM »
News release of today from BHE, that the deal has closed, subject to the usual approvals. [Also posted in the general news topic by globalfinancepartners.]
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Valuehalla

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Re: BRK: 17,5 B Oncor Acquisition
« Reply #3 on: July 07, 2017, 03:50:35 AM »
It looks great.

Oncor will provide app. 1,8 B EBITDA and app. 1,6 B CF.

http://www.oncor.com/EN/Documents/Investors/Q1%202017%20Earnings%20Call%20Deck%20-%20Final%20-%205.08.17.pdf

On the invested cash of 9b thats app 20%, on the 11,25 B thats 15 %.
Further there will be a bulk of operative and financial synergies, which will be realized in the future.

So very well done.


If we add app. 1,7 B to 24,1 B full year earnings of BRK thats 25,8 B so 7,5 % more.

Mr Market shall deliver us 7,5 % more marketcap....please !   8)
« Last Edit: July 07, 2017, 05:09:14 AM by Valuehalla »
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giofranchi

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Re: BRK: 17,5 B Oncor Acquisition
« Reply #4 on: July 07, 2017, 04:15:15 AM »
Seems like a smart buy.

+1

Once agian high general market valuations and political/macro uncertainties are not allowed to get in Berkshire's way when a smart buy becomes available.

Cheers,

Gio
« Last Edit: July 07, 2017, 06:33:21 AM by giofranchi »
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John Hjorth

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Re: BRK: Oncor Acquisition
« Reply #5 on: July 07, 2017, 04:20:14 AM »
Valuehalla,

Aren't you confusing EBITA with EBITDA in your last post? I see a net income 2017Q1 of USD 73 M on page 5.
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longinvestor

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Re: BRK: Oncor Acquisition
« Reply #6 on: July 07, 2017, 05:04:07 AM »
A repeating theme underlying Berkshire purchases is that the investee was laid out to ruins by leveraged buyouts, causing the business to drown in debt. They call it by different names, like private equity etc. but it is always the same. Thankfully, Oncor provides an essential service and regulators want Berkshire to be the buyer. Longevity over all else, including price consideration, shall we say? How about the term tailor made?

So, May the vulture financiers continue to be sinful & greedy, all the Omaha boyz have to do is sit back and wait. All it takes is about 5-7 years, the typical time frame for the exit strategy for the LBO types.
« Last Edit: July 07, 2017, 05:08:49 AM by longinvestor »

longinvestor

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Re: BRK: Oncor Acquisition
« Reply #7 on: July 07, 2017, 05:32:58 AM »
Valuehalla,

Aren't you confusing EBITA with EBITDA in your last post? I see a net income 2017Q1 of USD 73 M on page 5.

Are there any NOL's or similar offsets in play here?

John Hjorth

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Re: BRK: Oncor Acquisition
« Reply #8 on: July 07, 2017, 05:50:59 AM »
Attached are the 2016 Oncor financials.

Just a few observations after a first glance:

Cash flow from operations 2016: USD 1.429 B [for the whole Oncor].
Goodwill in balance sheet: USD 4.064 B [for the whole Oncor].
Membership interest [equity]: USD 7.710 B [for the whole Oncor].
Cash outlay, ref. news release:  USD 9.000 B [for 80 per cent of Oncor].
Implying goodwill for BHE before purchase accounting adjustments under past equity consolidation method : [USD 4.064 B + USD 9.000 B - [0.8 x USD 7.710 B]] = USD 6.896 B.
[All based on if the transaction took place 1st January 2017.]

- - - o 0 o - - -

Please also note the debt [notes] in note 7 at USD 5.510 B. Just the refinancing of this debt going forward for Oncor under Berkshire & BHE umbrella will generate several millions in interest savings every year, the clip of the refinancing steps naturally depending on the terms for early redemption of the existing notes.

Edit:

To me, this already looks better than a pile of T-bills worth USD 9 B for Berkshire.
« Last Edit: July 07, 2017, 09:53:26 AM by John Hjorth »
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John Hjorth

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Re: BRK: Oncor Acquisition
« Reply #9 on: July 07, 2017, 07:54:36 AM »
Valuehalla,

Aren't you confusing EBITA with EBITDA in your last post? I see a net income 2017Q1 of USD 73 M on page 5.

Are there any NOL's or similar offsets in play here?

I don't see any information about NOLs in the notes or balance sheet, longinvestor.

There is USD 2.788 B "utility float" [deferred taxes] in the balance sheet, not bad at all.

The tax situation for Oncor is hairy, based on what mess Oncor is part of right now, ref. the content of note 12. Berkshire has really been fishing in white waters here.
« Last Edit: July 07, 2017, 07:57:44 AM by John Hjorth »
”In the race of excellence … there is no finish line.”
-HH Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the United Arab Emirates and Ruler of Dubai