TXU shareholders back $32B buyout
DALLAS -- Investors led by private equity firms Kohlberg Kravis Roberts and TPG, formerly Texas Pacific Group, hope to get the last regulatory approval and complete the deal in the next few weeks.
There may not be many more deals this size for a while, as banks have become reluctant to finance big takeovers. KKR and TPG locked up their financing at the height of the buyout binge earlier this year.
KKR and TPG plan to borrow up to $37.4 billion to swing the deal, in which they will also assume about $13 billion in old TXU debt.
More than 95% of the shares that were voted favored the merger. Under Texas law, TXU needed approval from the holders of two-thirds of all its shares, and got 74% for the sale. About one-fifth of shares weren't cast.
Analysts said approval was virtually assured after TXU's largest shareholder, fund manager Franklin Resources, switched from opposition to supporting the sale last week.
The major services that advise institutional investors on voting matters also recommended that TXU shareholders accept the KKR-TPG bid of $69.25 a share. Like Franklin, they said a tightening of credit markets made it unlikely anyone could finance a better offer.
"The credit markets to an extent worked in our favor for the vote," Chief Executive C. John Wilder said in a brief interview. "We got a great deal."
Wilder, who will leave TXU after the sale closes, said the KKR-TPG financing appeared to be in good order.
Former Commerce Secretary Donald Evans, who will become chairman of the holding company buying TXU, said the buyers were pleased with the vote.
"This transaction is not only good for TXU shareholders, but also for TXU customers and residents across the state of Texas," Evans said, vowing "stronger environmental policies and to providing reliable and affordable power."
About the only organized opposition left came from a few Texas consumer and environmental groups, who say that the new owners' plans to push ahead with construction of three coal-fired power plants will increase emissions of toxic mercury and gases tied to global warming.
