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Biggest Private Buyout Ever Has Green Tinge

ByABC News
February 26, 2007, 1:04 PM

Feb. 26, 2007 — -- Unless you live in parts of Texas that get electricity from TXU Corp., today's news that Kohlberg Kravis Roberts will buy TXU is probably just an arcane business headline.

That, even though it's the biggest private corporate buyout in history -- $32 billion, plus about $13 billion in debt. But that really doesn't affect most of us.

Major environmental groups, however, are calling the deal a "watershed." By pushing, negotiating, lobbying and taking TXU to court, they say, they got the terms of the deal changed to benefit the global environment.

Before selling to Kohlbert Kravis Roberts, perhaps the nation's most aggressive buyout firm, TXU agreed to cancel most of a $10 billion plan to build eight giant coal-fired power plants.

"The world is changing a little bit when the biggest buyout deal yet is made contingent on certain green conditions going forward having to do with climate change," said Fred Krupp, president of Environmental Defense, an activist group that had been doing battle with TXU.

The deal must still be approved by shareholders and regulators.

"While this earthquake took place in Texas, the reverberations are going to be felt from Wall Street to Washington, and it's about time," said David Hawkins of the Natural Resources Defense Council, which had joined Environmental Defense in battling TXU's coal plants.

TXU also agreed to cut electricity prices 10 percent, which it said would save TXU residential customers more than $300 million per year.

In addition, TXU will join a business coalition called USCAP, which calls on the federal government to set limits on the amounts of greenhouse gases companies can generate.

Other members of the group, which includes General Electric Co., DuPont and Alcoa Inc., argue that they can make a profit by developing new, energy-efficient technologies.

In recent months, environmentalists have blasted TXU in publications and advertisements, and controversy over the proposed coal plants was seen as one reason that TXU's stock price had fallen recently after a mighty four-year rise.