TXU Shareholders To Vote

DALLAS (AP) – Shareholders of TXU Corp. were expected Friday to approve the sale of the Texas power generator for $32 billion in one of the biggest private buyouts ever.

Investors led by Kohlberg Kravis Roberts & Co. and TPG hope to complete the deal in the next few weeks.

Under Texas law, the sale would need approval from owners of two-thirds of TXU stock. Analysts say that was virtually assured when TXU's largest shareholder, Franklin Resources Inc., abandoned opposition to the sale last week.

Several investor-advising services also recommended that shareholders accept the KKR-TPG bid of $69.25 per share. Like Franklin, they said a tightening of credit markets made it unlikely that anyone could finance a better offer.

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.

About the only organized opposition left comes 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.

KKR and TPG still need approval from the Nuclear Regulatory Commission to take over TXU's nuclear reactor south of Fort Worth. On Thursday, the Federal Energy Regulatory Commission gave its blessing to the sale, finding no evidence that the change in ownership would hurt consumers.

KKR and TPG announced an agreement to buy Dallas-based TXU in late February after weeks of secret negotiations. The offer represented a 15 percent premium over the market price of TXU shares.

TXU Chief Executive C. John Wilder said he had never shopped the company and that interest from the buyout firms “came completely out of right field.”

Private equity firms found TXU attractive because of its large fleet of power plants, including relatively cheap coal plants, and more than 2 million residential and business customers.

TXU's stock soared from late 2002 to late 2005. That dramatic climb ended as the company came under fire for a sharp increase in electric rates after deregulation — Texas has among the nation's highest prices — and when company pushed for 11 new coal-fired plants in the state.

KKR co-founder Henry Kravis and TPG founding partner David Bonderman muted some of the criticism by agreeing to drop plans for eight of the coal plants and to reduce some rates.

TXU shares closed at $67.32 Thursday after trading as low as $53.58 in January.