Category Archives: Acquisitions

HomeServices of America Acquires Largest Private Residential Real Estate Company in the United States

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Berkshire Hathaway’s HomeServices of America, Inc. has acquired The Long & Foster Companies, Inc., the largest private residential real estate company in the United States by sales volume.

The acquisition includes Long & Foster’s family of companies, including Long & Foster Real Estate and its market-leading affiliated business lines in mortgage, settlement services, insurance, and property management. Financial terms of the transaction were not disclosed.

In 2016, Long & Foster Real Estate had nearly $29 billion in sales volume and more than 81,000 home sale transactions; Prosperity Mortgage originated $3.3 billion in home loans, representing nearly 12,000 mortgages; Long & Foster’s settlement services companies closed over 20,000 title and escrow transactions; and Long & Foster Insurance issued approximately 8,300 property and casualty insurance policies.

Headquartered in Chantilly, Virginia, Long & Foster Real Estate is the largest independent residential real estate brand by volume and the second largest independent brand by units according to the 2017 REAL Trends 500 report.

The company has approximately 11,000 agents in over 230 offices serving buyers and sellers in major markets across the Mid-Atlantic and beyond, including Virginia, Maryland, the District of Columbia, West Virginia, North Carolina, Pennsylvania, Delaware, and New Jersey.

Founded in 1968 by Wes Foster and Henry Long, Long & Foster’s family of companies has grown to become one of the nation’s foremost real estate and financial services companies. The Long & Foster name is synonymous with providing clients the highest level of customer service, local expertise, and resources, all delivered by a team of knowledgeable agents using the firm’s renowned innovative technologies and data-driven insights.

Wes Foster will remain with the company as Chairman Emeritus. Jeff Detwiler, Long & Foster’s current president and chief operating officer, will assume the role of chief executive officer and, together with the existing team of enterprise and business line leaders, will oversee growth initiatives and continue to manage day-to-day operations.

© 2017 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Commentary: It’s All in the Cards Monday for Berkshire’s Oncor Bid

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Monday’s hearing before Judge Christopher Sontchi in U.S. Bankruptcy Court in Delaware, could decide the fate of Berkshire Hathaway’s $9 billion bid for Oncor Electric Delivery. It’s the latest round of a high stakes poker game that has seen all the players trying to strengthen their hands.

For Berkshire, the key to whether it wins the right to acquire the utility may not just be whether Warren Buffett can prevail over Paul Singer’s Elliot Management, but also the judge’s response to a third bid offering $9.45 billion, which is said to be coming from Sempra Energy of San Diego.

Paul Singer and Elliot Management’s strong hand comes from its status as the largest owner of every class of impaired debt. The hedge fund recently purchased $60 million of leveraged buyout notes to cement that status. And, while Singer has talked of putting together a bid to top Buffett’s offer, he could just as well side with Sempra’s offer.

Another Player Comes to the Table

Sempra Energy could have a strong hand of its own, as it is a credible bidder. Sempra was created in 1998 by a merger of parent companies of two long-established, and highly respected, investor-owned utilities — Los Angeles-based Pacific Enterprises, the parent company of Southern California Gas Co., and Enova Corporation, the parent company of San Diego Gas & Electric by a merger of parent companies of two long-established, and highly respected, investor-owned utilities — Los Angeles-based Pacific Enterprises, the parent company of Southern California Gas Co., and Enova Corporation, the parent company of San Diego Gas & Electric. Today it has 16,000 employees and serves 32 million customers worldwide.

Is the Key the Support of the Stakeholders?

Berkshire’s aces come from an approach that has focused on lining up support from the stakeholders that receive power from Oncor. Five key Texas stakeholder groups have all endorsed Berkshire’s bid.

On Friday, Berkshire Hathaway Energy announced that the Staff of the Public Utility Commission of Texas, Office of Public Utility Counsel, Steering Committee of Cities Served by Oncor, the Texas Industrial Energy Consumers and the IBEW Local 69 have entered into a settlement agreement with Berkshire Hathaway Energy.

The agreement resolved all issues in Berkshire Hathaway Energy’s acquisition of Oncor.

By entering into the settlement, the parties agreed that the acquisition is in the public interest, meets the statutory standards and will bring substantial benefits to Oncor and its customers. The parties to the agreement ask the Public Utility Commission of Texas to approve the acquisition consistent with the enhanced commitments in the agreement.

Will Berkshire Raise its Offer?

Both Greg Abel, Berkshire Hathaway Energy chairman and CEO, and Warren Buffett, have stated the company will stand firm on its $9 billion offer to acquire 80% of Oncor and will not be increasing its offer. Berkshire will collect a $270 termination fee if its offer is rejected.

Berkshire is hoping that in the end Judge Sontchi is persuaded by the support of 12 key stakeholder groups across Texas for Berkshire’s bid.

“The strong coalition of stakeholders consistently express the appropriate concerns and necessary protections for Oncor and its customers,” said Abel. “We stand ready to deliver on and exceed the regulatory commitments

In any case, Monday is looking like the decisive day in the fate of Oncor. Like a poker game of Texas Hold ‘Em, all the cards will be on the table.

© 2017 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Key Texas Regulators and Union Rule Berkshire’s Oncor Bid is in the Public Interest

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In advance of Monday’s hearing in U.S. Bankruptcy Court in Delaware, Berkshire Hathaway Energy has announced that the Staff of the Public Utility Commission of Texas, Office of Public Utility Counsel, Steering Committee of Cities Served by Oncor, the Texas Industrial Energy Consumers and the IBEW Local 69 have entered into a settlement agreement with Berkshire Hathaway Energy.

The agreement resolves all issues in Berkshire Hathaway Energy’s acquisition of Oncor.

“We are excited by this unprecedented agreement with these stakeholders, as they have committed their full support to our acquisition of Oncor. This show of support is extraordinary,” said Greg Abel, Berkshire Hathaway Energy chairman, president and CEO. “Our financial strength and commitment to invest in the business will serve Oncor and its customers well and we will exceed their expectations. Our deal offers a great outcome for Texas.”

By entering into the settlement, the parties have agreed that the acquisition is in the public interest, meets the statutory standards and will bring substantial benefits to Oncor and its customers. The parties to the agreement ask the Public Utility Commission of Texas to approve the acquisition consistent with the enhanced commitments in the agreement.

© 2017 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Berkshire Refuses to Get Into a Bidding War Over Oncor

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Will Berkshire raise their $9 billion bid to acquire Oncor Electric Delivery Company if Elliot Management comes in with a higher offer? The answer is no.

Greg Abel, Berkshire Hathaway Energy chairman and CEO, and Warren Buffett, chairman and CEO of Berkshire Hathaway stated the company will stand firm on its $9 billion offer to acquire 80% of Oncor and will not be increasing its offer.

“We appreciate the continued opportunity to collaborate with many stakeholder groups in Texas and thank them for their outstanding support, which sets our offer apart from any other bid,” Abel said. “We’re committed to being an exceptional long-term partner in Texas and our simple, straightforward deal is good for Oncor, its customers and the state.”

Berkshire Hathaway Energy’s bid for Oncor includes 47 regulatory commitments that have the support of 12 key stakeholder groups across Texas. “The strong coalition of stakeholders consistently express the appropriate concerns and necessary protections for Oncor and its customers,” said Abel. “We stand ready to deliver on and exceed the regulatory commitments.”

“Oncor is a strong company with values, management and employees that will fit well with Berkshire Hathaway,” said Buffett. “We already have a number of excellent companies operating in Texas. It is a great place to do business, and we look forward to continuing to invest in the state.”

With new stakeholders signing on to support Berkshire’s bid every day, there is good reason to think that will win its Texas-sized prize. However, if the Oncor deal falls through, Berkshire will receive a $270 million termination fee.

© 2017 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Stakeholders Continue to Line Up Behind Berkshire’s Oncor Bid

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Berkshire Hathaway Energy has announced that the Texas Cotton Ginners’ Association and CMC Steel have agreed to support its proposed acquisition of Oncor Electric Delivery Company LLC (Oncor). The growing number of commitments now includes 12 stakeholder groups, including several groups – like CMC Steel – that intervened during former proposed acquisitions of Oncor.

“As we work through the approval process, we’re encouraged that our meetings with stakeholders across Texas continue to confirm that the deal we are proposing is a good fit for Oncor’s customers and Texas,” said Greg Abel, Berkshire Hathaway Energy chairman, president and CEO. “We truly appreciate the support we’re receiving from many groups, and we’re looking forward to closing the deal and welcoming Oncor to the Berkshire Hathaway Energy family.”

Berkshire Hathaway Energy will leverage its financial strength to benefit Oncor customers and Texas. The all-cash deal includes 47 regulatory commitments and ring-fencing that ensures Oncor will continue as a strong electric transmission and distribution company.

The influential Texas stakeholder groups that support Berkshire Hathaway Energy’s proposed acquisition of Oncor include: Public Utility Commission Staff; Cities Served by Oncor; Texas Industrial Energy Consumers; Office of Public Utility Counsel; TXU Energy; NRG Energy; the Texas Energy Association for Marketers (TEAM); the Alliance for Retail Markets (ARM); IBEW Local 69; Targa Pipeline Mid-Continent WestTex LLC/Targa Midstream Services LLC; Texas Cotton Ginners’ Association; and CMC Steel. TXU Energy and NRG Energy represent two of the largest retail electric providers in Texas, with TEAM and ARM representing dozens of Texas electric market participants. ARM participating members include Champion Energy Services, LLC; Direct Energy, L.P.; NRG Retail Companies; and TXU Energy Retail Company LLC.

© 2017 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Commentary: Familiar Territory, Berkshire Wins if it Loses

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Warren Buffett and Berkshire Hathaway look to be on the verge of winning Oncor Electric Delivery Co., a Texas-sized prize it has been chasing for the last three years, as the utility struggled under bankruptcy proceedings.

Now, all that stands in its way is a last minute bid by Paul Singer and his hedge fund Elliot Management. The hedge fund is the largest creditor in Oncor’s parent company, Energy Future Holdings Corporation.

Singer scored a recent success when Elliot Management won a delay in finalizing Berkshire’s takeover while it puts together its own offer, reportedly a $9.3 billion bid that would top Berkshire’s $9 billion deal.

The delay moves the bankruptcy court date from August 10 to August 21.

In addition to winning approval from the bankruptcy judge, any deal put together by Berkshire Hathaway or Elliott Management has to pass muster with the Public Utility Commission of Texas (PUC), the agency that regulates the state’s electric and telecommunication utilities, and must rule that any approved acquisition is in the public interest.

The PUC has already rejected two prior takeover bids for Oncor, including last year’s bid from Hunt Consolidated Inc., and April’s bid from NextEra Energy Inc. The failed deals opened the door for Berkshire’s bid.

Berkshire, which entered the energy business in 1999, has built one of the largest utility holding companies, with $85 billion in assets and $17.4 billion in annual operation revenue, as of 2016.

Unlike many failed attempts at merging utilities, Berkshire has repeatedly acquired plum assets, including MidAmerican Energy, PacifiCorp, and NV Energy, and by allowing them to retain their earnings, made them stronger than they were before acquisition.

This is not something that escapes the PUC as it considers who should supply power to 10 million Texas residents, and a host of major manufacturers that need electricity at the lowest possible rates.

As Tony Bennett, president of the Association of Texas Manufacturers, pointed out in a recent editorial, Texas companies in the Oncor service area don’t have a choice of electricity suppliers, so whoever wins the bid has to be focussed on reliable service and low rates, not just the highest return for investors. This is where Berkshire Hathaway Energy excels.

Still, like so many deals that Buffett strikes, he wins even if he loses.

What’s a Hundred or Two Million Between Friends?

Termination fees are familiar territory for Buffett, who walked away with $175 million in 2008 when he refused to get in a bidding war for Constellation Energy. French energy company EDF doubled his offer, but a pile of cash that ran into the hundred millions suited him just fine for his three month pursuit of the Baltimore-based energy wholesaler.

This time, if the Oncor deal falls through, Berkshire will receive a $270 million termination fee.

Not a bad way to lose at all.

But, I wouldn’t bet on Berkshire losing this one.

© 2017 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Oncor Plan Would Slash Rates for 54,000 Customers

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Oncor Energy, which Berkshire Hathaway is hoping to acquire through its subsidiary Berkshire Hathaway Energy, has announced that it reached a proposed settlement in its rate case, which was filed earlier this year.

The rate case settlement also garnered wide support within the industry and among consumer groups.

Some 54,000 customers scattered across North, West and West Central Texas were suffering under sky-high electric rates from Sharyland Utilities, which has the highest power delivery rates in Texas.

Consumers waged a campaign to bring down those rates, which were hitting farmers and other large energy users particularly hard.

If approved by the Public Utility Commission of Texas, consumers could expect a 40 percent drop in electricity costs. The settlement would have Sharyland customers become Oncor customers.

In a statement, Berkshire Hathaway Energy commends Oncor’s efforts to achieve a balanced outcome for customers that helps keep rates among the lowest in Texas and preserves the company’s ability to invest in its system at reasonable cost.

“Berkshire Hathaway Energy’s ownership structure is a source of financial strength that uniquely positions us to provide the resources Oncor needs to fund the new equity requirement,” said Abel.

© 2017 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Berkshire Supports Oncor’s Plan to Swap Assets with Sharyland

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Berkshire Hathaway has no problem with Oncor planned asset swap with Texas utility Sharyland.

Oncor announced that it had entered into an agreement with Sharyland to swap assets in a transaction valued at approximately $400 million.

Under the terms of the proposal, Sharyland will exchange their retail distribution assets and retail distribution operations for a set of Oncor’s transmission lines in West and Central Texas.

Sharyland and Sharyland Distribution & Transmission Services (SDTS) will transfer to Oncor their retail distribution assets and retail distribution operations located in their Stanton, Brady, and Celeste (SBC) service territories, as well as their McAllen service territory.

Oncor will transfer to SDTS transmission lines of similar value located in West and Central Texas, which Sharyland will operate on behalf of SDTS.

The proposed transaction also means that Sharyland’s approximately 54,000 retail distribution customers will become Oncor customers and, as a result, will see significantly reduced regulated retail delivery rates.

In a statement, Berkshire Hathaway Energy said applauds Oncor and the various stakeholders for developing solutions to ensure continued safe, reliable, and affordable service for customers.

“The problem-solving culture demonstrated by Oncor and its management team will be a great fit with Berkshire Hathaway Energy,” said Greg Abel, Berkshire Hathaway Energy chairman, president and CEO. “The conditions of the agreements are examples of Oncor’s strong commitment to customers; that same commitment is reflected across Berkshire Hathaway Energy’s businesses.”

© 2017 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Stakeholders Continue to Line Up for Berkshire’s Oncor Bid

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Berkshire Hathaway continues to line up supporters for its Oncor Electric Delivery Company bid, including from a host of key stakeholders.

The International Brotherhood of Electrical Workers Local 69 and Targa Pipeline Mid-Continent WestTex LLC/Targa Midstream Services LLC are the latest stakeholders to have expressed support for Berkshire’s proposed acquisition of Oncor.

“Support from the IBEW and Targa along with the endorsements we’ve received from other Texas business, community and consumer groups reinforces that our proposal is good for both Oncor’s customers and for Texas,” said Greg Abel, Berkshire Hathaway Energy chairman, president and CEO. “We appreciate the continued and growing support as we work through the transaction process; collectively, these efforts help move the proposal forward to benefit Oncor’s customers, creditors and key stakeholders.”

The announcement brings the total number of influential Texas stakeholder groups that support Berkshire Hathaway Energy’s proposed acquisition of Oncor to 10, including: Public Utility Commission Staff; Cities Served by Oncor; Texas Industrial Energy Consumers; Office of Public Utility Counsel; TXU Energy; NRG Energy; the Texas Energy Association for Marketers (TEAM); the Alliance for Retail Markets (ARM); IBEW Local 69; and Targa Pipeline Mid-Continent WestTex LLC/Targa Midstream Services LLC. TXU Energy and NRG Energy represent two of the largest retail electric providers in Texas, with TEAM and ARM representing dozens of Texas electric market participants. ARM participating members include Champion Energy Services, LLC; Direct Energy, L.P.; NRG Retail Companies; and TXU Energy Retail Company LLC.

© 2017 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Berkshire Lines Up Support for Oncor Deal

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Berkshire Hathaway Energy has announced the support of new Texas stakeholder groups for its proposed acquisition of Oncor Electric Delivery Company.

The announcement adds to an influential list of Texas business, community and consumer groups that have endorsed Berkshire Hathaway Energy’s bid for Oncor.
TXU Energy, NRG Energy, the Texas Energy Association for Marketers (TEAM) and the Alliance for Retail Markets (ARM) have signed a growing list of regulatory commitments proposed by Berkshire Hathaway Energy and agreed to support approval of the transaction as proposed.

“Today’s announcement illustrates the growing support for Berkshire Hathaway Energy’s proposed acquisition of Oncor,” said Greg Abel, Berkshire Hathaway Energy chairman, president and CEO. “Ours is a different kind of proposal. It’s one that hasn’t been seen before, and we want Texans to know that we will be a stable, long-term partner.”

In addition to the 44 regulatory commitments previously proposed by Berkshire Hathaway Energy, the company today also announced the addition of three more commitments that support the successful competitive energy market in Texas.

“Berkshire Hathaway Energy has worked tirelessly to put together a widely supported deal for Oncor customers, one that supports growing the Texas economy,” said Bob Shapard, Oncor CEO.

TXU Energy and NRG Energy represent two of the largest retail electric providers in Texas, with TEAM and ARM representing dozens of Texas electric market participants.

ARM participating members include Champion Energy Services, LLC; Direct Energy, L.P.; NRG Retail Companies; and TXU Energy Retail Company LLC.

Berkshire believes that having the support of these entities further distinguishes this transaction from those that have been previously proposed and demonstrates a growing momentum that provides the largest infrastructure company in Texas with the backing and financial resources of Berkshire Hathaway Inc.

“We will continue working with the state of Texas and other interested parties to provide long-term value for Texans. Once all necessary approvals are received, we look forward to Oncor joining the Berkshire Hathaway Energy family of companies,” said Abel.

Today’s announcement brings the total number of influential Texas stakeholder groups that support Berkshire Hathaway Energy’s proposed acquisition of Oncor to eight, including: Cities Served by Oncor, Texas Industrial Energy Consumers, Office of Public Utility Counsel, and Public Utility Commission Staff.

© 2017 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.