Warren Buffett's latest deal to hit the skids after Kraft

This year isn’t shaping up to be the stuff of Warren Buffett dealmaking legend.

Buffett’s $9 billion bid to acquire Oncor Electric Delivery started to unravel last week after Paul Singer’s Elliott Management outmaneuvered the Oracle of Omaha by acquiring a small parcel of unsecured debt. That opened a window for Sempra Energy to swoop in and strike a deal to acquire the Texas utility.

The loss comes six months after another multibillion-dollar Buffett pursuit hit the skids. In February, his Berkshire Hathaway  committed $15 billion to help Kraft Heinz in a proposed buyout of Unilever. The Anglo-Dutch consumer goods giant rejected the approach, and the offer was quickly pulled.

The collapse of two high-profile pursuits in such a short time frame is a rarity for Buffett, who has spent decades building Berkshire into a sprawling conglomerate through shrewd takeovers. While he’s made many offers that went nowhere, it’s less common for such losses to play out in public.

Elliott’s purchase from Fidelity Investments of $60 million worth of leveraged notes in Oncor’s parent, Energy Future Intermediate Holding , was all it needed to do to block Buffett’s bid, according to people familiar with the matter. Buying the notes allowed the activist investor and another dissenting creditor to own the majority of all classes of impaired debt in the company, all but assuring that a bankruptcy judge would reject Buffett’s bid, said the people, who asked not to be identified because the matter was private.

Berkshire’s energy unit was aware of the risk posed by the Fidelity notes, the people said. But purchasing the debt would have disqualified those votes in favour of the transaction, according to the people. Typically, bankruptcy courts only require one group of unsecured creditors to support a takeover bid.

Berkshire Hathaway Energy declined to comment on its handling of the deal. Buffett didn’t respond to a request for comment.

Bloomberg