Berkshire Hathaway Inc (TIKER: BRK.B.NYSE). attempted to purchase one of the largest power-transmission companies in the U.S. — Oncor, but the deal fell through too fast so Buffett couldn’t to get its $270 million breakup fee, The Wall Street Journal reports.
Warren Buffett’s Berkshire Hathaway was in the process of negotiations trying to buy Oncor, Texas power-transmission company. Energy Future Holdings Corp., Berkshire and Oncor’s bankrupt parent company, reached a $9 billion deal last month, and the deal included the breakup fee.
However it needed approval by a bankruptcy judge, and Energy Future terminated the deal only hours before the necessary court hearing, preferring the bigger offer from Sempra Energy.
“It’s a large cost certainly to Berkshire, in the time and effort put in which is not resulting in any return. But Mr. Buffett’s main concern would have been his expected rate of return over time from his $9 billion price, and he wasn’t willing, of course, to go any higher from that,” David Kass, a professor at the University of Maryland’s Robert H. Smith School of Business and a Berkshire shareholder commented on the event.
It was not the first time that Energy Future lets Warren Buffett down. Berkshire Hathaway Inc. lost $873 million pretax on high-yielding Energy Future bonds that it bought in 2007.