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Investor advisers endorse record-setting $32 billion buyout of electric utility TXU

Investor advisers endorse record-setting $32 billion buyout of electric utility TXU

The pending sale of TXU Corp. got a boost Tuesday as two investor-advising services endorsed a record-setting $32 billion (euro23.4 billion) buyout of the electric company and said a scarcity of available credit made a better offer unlikely.
TXU shareholders are scheduled to vote Sept. 7 on the proposed sale to investors led by Kohlberg Kravis Roberts & Co. and TPG, formerly Texas Pacific Group.
The company's largest shareholder, fund manager Franklin Resources Inc., opposes the $69.25 per share offer as too low.
Institutional Shareholder Services Inc., which advises large investors on corporate voting issues, pointed to a tightening of credit for private equity deals like that for TXU, which would be the largest private buyout ever.
The equity groups locked in financing at the peak of the credit cycle and "some value will be irretrievably lost if TXU shareholders vote against the proposed transaction," according to ISS. It said TXU shareholders must balance against the risk of tougher regulatory and political oversight if the deal already on the table fails.
TXU has said it probably would break into three separate companies _ power generation, distribution and sales _ if it can't complete the buyout.
Another investor-advising firm, Glass Lewis, said the deal reflected an "all-time high value for shareholders." It said the offer was at the high end of values estimated by the financial adviser to a special committee of TXU's board, which reviewed bids.
TXU Chairman and Chief Executive C. John Wilder said the endorsements showed strong support for the TXU board's decision to recommend the sale.
ISS also urged TXU shareholders to oppose a resolution asking the company to cut mercury emissions to levels that can be achieved with the best control technology.
TXU operates coal-fired power plants that produce toxic mercury emissions and it seeks to build more. TXU management says it can't reduce emissions without closing plants or cutting power production.
Shares of TXU rose 63 cents, to $66.38 in afternoon trading.


Updated : 2021-03-07 20:19 GMT+08:00