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October 19, 2018

Sempra Energy’s Oncor to acquire InfraREIT for $1.275bn

US-based Oncor Electric Delivery Company (Oncor) has agreed to acquire 100% equity interest of InfraREIT for $1.275bn.

US-based Oncor Electric Delivery Company (Oncor) has agreed to acquire 100% equity interest of InfraREIT for $1.275bn.

InfraREIT is engaged in owning and leasing rate-regulated transmission and distribution (T&D) assets in Texas, which it leases to Sharyland Utilities.

The acquisition includes limited-partnership units in its subsidiary InfraREIT Partners and is expected to further expand  transmission footprint of Oncor, which is nearly 80% owned by Sempra Energy.

Oncor CEO Allen Nye said: “The purchase of InfraREIT gives us access to high-quality transmission assets that are adjacent to our service territory and are a great fit for our portfolio.

“As growth continues across Texas and new generation projects continue to come online, this acquisition positions us to make future investments in transmission infrastructure that will better serve the ERCOT market and our customers.”

"As growth continues across Texas and new generation projects continue to come online, this acquisition positions us to make future investments in transmission infrastructure."

To fund the acquisition, Oncor intends to use capital contributions proportionate to their ownership interests from Sempra Energy and TTI.

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San Diego-based energy services holding company Sempra Energy will acquire 50% limited partnership interest in a holding company, that will own Sharyland Utilities, for nearly $98m.

Sempra Energy CEO Jeffrey W Martin said: “This transaction advances our growth strategy and will expand our Texas regulated utility platform.

“These assets are highly desirable and supported by strong economic growth, attractive demographic trends and increased demand for electric transmission in Texas.

“We expect these acquisitions to be accretive to earnings. We also look forward to working with Sharyland on further developing electric transmission and related infrastructure in Texas.”

Completion of the transaction is subject to approval from the Public Utility Commission of Texas (PUCT) as well as Federal Energy Regulatory Commission and other customary closing conditions.

Additionally, the acquisition of InfraREIT will require approval by its shareholders and is subject to a go-shop provision whereby InfraREIT can solicit superior bids.

Sempra Energy and Oncor expect to complete the deal by mid-2019, if all conditions have been satisfied.

As per the terms of the deal, a subsidiary of InfraREIT will exchange certain assets with Sharyland, and upon completion of the transaction Oncor will own InfraREIT’s electric transmission and distribution business in Central, North and West Texas. Sharyland will own assets in South Texas.

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