What is Sempra Energy selling?

Sempra Energy, along with its partner The Royal Bank of Scotland, is selling the majority of its commodity marketing and trading business, known as RBS Sempra Commodities LLP. This includes global oil, metals, coal, emissions, plastics, agricultural commodities, European power and gas, and investor products.

Who is the buyer, and what is the purchase price structure?

The buyer is J.P. Morgan Ventures Energy Corporation. The purchase price will be the book value of the sold business at closing, plus an additional $468 million. Sempra Energy will receive 53-1/3% of this total amount.

What parts of the business are being retained by Sempra/RBS?

Sempra and RBS will retain the North American power and gas trading businesses, as well as the retail energy solutions business of the Partnership.

What are the main conditions for closing this transaction?

Key conditions include obtaining necessary governmental and regulatory approvals (such as from the UK FSA, US DOJ/FTC, and Swiss FINMA), the absence of any prohibitive legal orders, accuracy of representations and warranties, performance of covenants, and the execution of related agreements, including transition services. A condition related to the credit rating of J.P. Morgan Chase & Co. is also in place.

SRE/SREA 8-K: Material Agreements

Summary

This 8-K filing from Sempra Energy (SRE) on February 19, 2010, announces a significant agreement to sell a substantial portion of its commodity marketing and trading business. Sempra, along with its partner The Royal Bank of Scotland (RBS), has entered into a Purchase and Sale Agreement with J.P. Morgan Ventures Energy Corporation (JPM) to divest the "Subject Business," which includes global oil, metals, coal, emissions (excluding North American power), plastics, agricultural commodities, European power and gas, and investor products. The Partnership will retain its North American power and gas trading and retail energy solutions businesses. The sale is structured as a purchase of certain subsidiaries and assets, with the aggregate purchase price based on the book value of the Subject Business at closing plus $468 million. Sempra is set to receive 53-1/3% of the total proceeds, with RBS receiving 46-2/3%. This transaction represents a strategic move by Sempra to divest non-core commodity operations, as previously signaled by RBS's intention to exit their joint venture.

Key Highlights

1Sempra Energy and RBS agree to sell the majority of their commodity trading and marketing business (RBS Sempra Commodities LLP) to J.P. Morgan Ventures Energy Corporation.
2The sale includes global oil, metals, coal, emissions (excluding North American power), plastics, agricultural commodities, European power and gas, and investor products.
3The Partnership will retain its North American power and gas trading and retail energy solutions businesses.
4The purchase price is based on the book value of the divested business at closing plus a fixed amount of $468 million.
5Sempra Energy will receive 53-1/3% of the aggregate purchase price, and RBS will receive 46-2/3%.
6The transaction is subject to various closing conditions, including governmental and regulatory approvals (e.g., HSR Act, UK FSA, FINMA) and the absence of prohibitive injunctions.
7Sempra and RBS have also entered into a separate agreement to negotiate definitive documentation regarding the distribution of proceeds, amendments to the Partnership Agreement, and the process for handling the remaining Partnership business.

SEMPRA 8-K Report, Material Agreement (Feb 19, 2010)

Summary

Key Highlights

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