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Paul Singer Ready, Willing, Maybe Able To Pull Plug On Warren Buffett’s $9 Billion Energy Deal

After what the Oracle said about activists, Paul Singer’s not inclined to give him a discounted 87th birthday gift.
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Practitioners of the academic and financial discipline of Buffettology were pretty underwhelmed by the Oracle of Omaha’s plans to become a modern-day Texas wildcatter, by which we mean his plan to spend $9 billion on the capital-intensive but steadily-returning business of delivering electricity to several million Texans. They are not alone. Paul Singer happens to know a thing or two about the company Buffett hopes to buy, Energy Future Holdings, as he is its largest creditor. And the Elliott Management founder’s none-too-impressed with Buffett’s offer, either. And he thinks he can do better. Only a little better, to be sure, but better all the same.


Elliott Management, the largest creditor of the bankrupt parent of Oncor Electric Delivery Co, said it was putting together an offer that values the utility at about $18.5 billion, including debt….

Elliott, run by billionaire Paul Singer, said on Monday it was working on a $9.3 billion offer for Energy Future….

"We fear that the Berkshire transaction does not provide such value," the hedge fund said.

A battles royale go, it hardly gets better than this. The world’s most legendary investor vs. its most infamous activist investor, about whose strategy said most legendary investor (and his sidekick) had some pretty sharp words. A man nearing retirement planning for the world’s future by investing in stable, long-term infrastructure businesses vs. a man gleefully preparing for the investment opportunities offered up by Armageddon. A man best known for sharing DQ Blizzards with Bill Gates vs. a man best known for nailing a foreign head of state to the wall. Two billionaires in a clash for the ages over $300-$400 million.

Objectively speaking, of course, Singer’s planned bid does offer more value than Buffett’s, specifically those $300-$400 million. Of course, so did NextEra’s $9.5 billion deal last year. The only problem is, that was one of two bids over the past two years shot down by Texas energy regulators over the would-be buyers’ refusal to promise not to load Oncor down with even more debt. Berkshire Hathaway, by contrast, is quite a bit more regulator-friendly. The same, perhaps, cannot be said of Paul Singer or Elliott. But maybe they can pry an extra couple hundred million from Buffett’s $100 billion-and-growing pile of cash.

Elliott says considering $18.5 billion deal for Oncor [Reuters]



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