US, Juno Beach, Fla. – Florida-based NextEra Energy (NASDAQ: to NEE), a clean energy supplier, agrees an $18.4 billion deal for Oncor Electric Delivery Company’s acquisition, Texas’ largest electric utility.

Oncor is a subsidiary of Energy Future Holding, which is currently bankrupt and has given NextEra the victory over the Texas electric giant after eight months of negotiations.

The covenant can’t be official yet due to bankruptcy rules, but NextEra CEO Jim Robo already stated the position of the company on the deal.

“We are pleased to have reached a definitive agreement to acquire EFH’s 80 percent indirect interest in Oncor.,” said Robo in a statement.

The company’s chairperson stated that NextEra and Oncor are going to follow the same strategy of making smart and long-term investments in transmission and distribution of electricity.

What does the deal mean for NextEra?  

NextEra has consolidated as the world’s largest generator of renewable energy from the wind and the Sun, has 120 facilities operating in the United States and 25 in Canada and relies on less than 5% of fossil energy.

NextEra is currently the second largest electric utility in the U.S, based on market value, worth about $52.8 billion. Image Source: Star Telegram
NextEra is currently the second largest electric utility in the U.S, based on market value, worth about $52.8 billion. Image Source: Star-Telegram

Between court rulings and regulatory procedures, NextEra expects to deal to close early next year, but this is not enough guarantee for the company. Until a Delaware bankruptcy judge gives blesses the offer, other potential buyers are free to make a better deal. Even after that, the NextEra $18 billion checks could be erased with a $275 million breakup fee.

If it goes through, the contract will fall right into the plans of Energy Future Holdings to exit from bankruptcy protection. The Dallas organization holds Luminant, an energy generator; TXU, a retail power company; and Oncor, which owns the power line that brings electricity to the customers in Texas. The final supplier is a consistent money-maker, as it had about 3.4 million customers, 121,000 miles of transmission lines and made about $3.9 billion in revenue last year.

The acquisition of 80% of Oncor would turn them into a dominating presence in the south of the country, potentially raising the company to the top of the list. According to the NextEra, both companies’ combined would serve 8.6 million customers, own about 200,000 miles of power lines and possess $102 billion in total assets.

A shaky deal

Judge Christopher Sontchi of the Delaware court on Dec. 3 confirmed a reorganization plan for EFH that would have sold Oncor to Hunt Consolidated and a consortium of investors for $18 billion. The consortium was to inject $12.1 billion dollars, but the sale collapsed in April after certain investors pulled out.

Since then, other bidders have expressed interest in Oncor, including billionaire Warren Buffett’s Berkshire Hathaway (NASDAQ: BRK.A) and Edison International (EIX), investor funds that could easily come up with a higher offer.

It has been more than two years since EFH filed chapter 11 bankruptcy, costing investors from Henry Kravis to Warren Buffet billions of dollars.

Source: The Street