The world's biggest private equity takeover was unveiled today as TXU Corp agreed terms of a $45bn (£22.9bn) bid from Kohlberg Kravis Roberts and Texas Pacific.
TXU, the main supplier of electricity to the state of Texas, said the newly privatized company "will deliver price cuts and price protection benefits to electric customers, strengthen environmental policies, make significant investments in alternative energy and institute corporate policies tied to climate stewardship".
The Dallas-based power generating group has been described as "public enemy number one" by green lobbyists in the US because of its aggressive programme of building coal plants.
TXU, the main supplier of electricity to the state of Texas, said the newly privatized company "will deliver price cuts and price protection benefits to electric customers, strengthen environmental policies, make significant investments in alternative energy and institute corporate policies tied to climate stewardship".
The Dallas-based power generating group has been described as "public enemy number one" by green lobbyists in the US because of its aggressive programme of building coal plants.
But today it pledged a strengthening of its environmental policies, along with new investments in alternative energy. The number of planned coal-fuelled generation units has been reduced 11 to three, which it said will prevent 56m tonnes of annual carbon emissions.
TXU also said it would increase its commitment to exploring renewable energy sources and investing in alternative energy technologies.
The deal was welcomed by environmentalists in the US. Fred Krupp, president of Environmental Defense, said it was "one of the most significant developments" in America's fight against global warming.
He said he commended KKR and TPG for not only dropping TXU's applications for eight proposed coal plants in Texas, but also "for the many other commitments they have made to reduce air pollution and global warming emissions".
For TXU "this is a momentous event for our company", said TXU chairman and chief executive C. John Wilder. "The new ownership and business structure will enable us to better meet the growing energy needs of Texans."
Henry Kravis, founding partner of KKR, said the buyout firms had listened to the environmental concerns raised over the deal and, as a result, have developed "a new vision with management of how we can turn TXU into a more innovative, customer-centric, environmentally friendly company, and we plan to work with management to implement it".
He added: "We intend to hold this as a long-term asset, and we recognize the need to balance growth with environmental considerations."
Mr Kravis is a legendary figure in the private equity industry. He was behind the $30bn leveraged buyout of tobacco and food giant RJR Nabisco in 1989, a deal immortalised in the book Barbarians at the Gate.
Shareholders in TXU are being offered $69.25 a share, which represents a 25% premium to the average closing share price over the 20 days ending February 22, 2007.
The buyout group also includes Goldman Sachs, Lehman Brothers, Citigroup and Morgan Stanley. TXU also said former US secretary of state James Baker will become advisory chairman.
The deal, which includes around $13bn of debt, trumps the recent $38.9bn acquisition of Equity Office Properties by rival private equity player, Blackstone.
It is the third time in the last four months that a new record had been set as cash-rich private equity firms target ever-larger companies.
The new global buyout record comes as the debate over the growing role of private equity in Britain becomes increasingly heated.
The GMB and other unions are conducting a high-profile campaign against private equity firms, accusing them of laying off thousands of workers in the pursuit of quick profits.
The GMB is planning to protest tomorrow outside a private equity summit in Frankfurt, Germany, highlighting job losses at the AA, NCP and Birdseye, all of which have fallen under private equity ownership.
TXU also said it would increase its commitment to exploring renewable energy sources and investing in alternative energy technologies.
The deal was welcomed by environmentalists in the US. Fred Krupp, president of Environmental Defense, said it was "one of the most significant developments" in America's fight against global warming.
He said he commended KKR and TPG for not only dropping TXU's applications for eight proposed coal plants in Texas, but also "for the many other commitments they have made to reduce air pollution and global warming emissions".
For TXU "this is a momentous event for our company", said TXU chairman and chief executive C. John Wilder. "The new ownership and business structure will enable us to better meet the growing energy needs of Texans."
Henry Kravis, founding partner of KKR, said the buyout firms had listened to the environmental concerns raised over the deal and, as a result, have developed "a new vision with management of how we can turn TXU into a more innovative, customer-centric, environmentally friendly company, and we plan to work with management to implement it".
He added: "We intend to hold this as a long-term asset, and we recognize the need to balance growth with environmental considerations."
Mr Kravis is a legendary figure in the private equity industry. He was behind the $30bn leveraged buyout of tobacco and food giant RJR Nabisco in 1989, a deal immortalised in the book Barbarians at the Gate.
Shareholders in TXU are being offered $69.25 a share, which represents a 25% premium to the average closing share price over the 20 days ending February 22, 2007.
The buyout group also includes Goldman Sachs, Lehman Brothers, Citigroup and Morgan Stanley. TXU also said former US secretary of state James Baker will become advisory chairman.
The deal, which includes around $13bn of debt, trumps the recent $38.9bn acquisition of Equity Office Properties by rival private equity player, Blackstone.
It is the third time in the last four months that a new record had been set as cash-rich private equity firms target ever-larger companies.
The new global buyout record comes as the debate over the growing role of private equity in Britain becomes increasingly heated.
The GMB and other unions are conducting a high-profile campaign against private equity firms, accusing them of laying off thousands of workers in the pursuit of quick profits.
The GMB is planning to protest tomorrow outside a private equity summit in Frankfurt, Germany, highlighting job losses at the AA, NCP and Birdseye, all of which have fallen under private equity ownership.
Source: The Guardian
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