SRE: We like strategic direction of Oncor acquisition; not sure of financing

Strategically, we believe this is a good deal for SRE’s investors: The five year $XXXB investment program at Oncor should be accretive to SRE’s earnings and help raise the value of SRE. More than anything else, we believe that SRE paid …, but not be strapped with the … “Winner’s Curse,” in our opinion. However, SRE’s choice to finance part of the deal with …, in our opinion, based on some basic math.

Deal terms: Although details were scant, it seems SRE would buy 100% of Oncor’s ultimate parent, Energy Future Holdings Corp. (EFHC), for $XXXB in cash, resulting in an EV for Oncor of about $XXXB.

Third-party investor(s) for risk mitigation:

Based on some simple calculations, we believe that SRE paid just … for the deal:
SRE’s ultimate ownership: Sale to a … would leave … with total equity interest in … and, therefore, a … (… an XX% equity interest in Oncor).
Depending on the tax rate at EFHC, … to ROE:
Oncor’s CAGR in net income from … for SRE’s 2018 …:

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