TXU Taken Private in Largest-Ever Leveraged Buyout

TXU has agreed to be taken private by a group of investors led by Kohlberg Kravis Roberts and Texas Pacific Group for $45 billion in what would be the largest leveraged buyout in history, The New York Times reports.

Bowing to environmentalists' demands (Environmental Defense and The Natural Resources Defense Council participated in the TXU negotiations and support the transaction), the bidding consortium has agreed to scale back TXU’s controversial plan to build 11 new coal plants and will instead build three.

Other environmental initiatives include:

• $400 million investment in demand side management initiatives,
• Increased commitment to exploring renewable energy sources and investing in alternative energy technologies,
• William Reilly, Chairman Emeritus of the World Wildlife Fund and former EPA Administrator, will join board of directors and lead effort in making climate stewardship central to corporate policies, and
• TXU will create an independent Sustainable Energy Advisory Board comprised of individuals who represent the following interests: the environment, customers, Texas economic development and ERCOT reliability standards.

TXU plans to reorganize into three independently managed businesses. TXU’s power-generation business will be renamed Luminant Energy; its energy transmission and distribution business will become Oncor Electric Delivery; and TXU Energy, its retail arm, will keep its current name, the company said.

TXU is allowed, and plans, to solicit bids from other potential buyers through April 16.

View a Webcast of the anouncement here.