TXU Accepts $32 B Buyout Offer

Elena
26 Feb, 2007
New York City

The biggest electricity producer in Texas announced an agreement to be acquired by a group including Kohlberg Kravis Roberts & Co., Texas Pacific Group, Goldman Sachs and three other firms. The acquisition is worth about $32 billion, including the assumption of $13 billion in debt. If the deal completes, it would be the largest private buyout in U.S. corporate history.

[R]8:00 AM Microsoft must pay $1.52 billion to Alcatel-Lucent.[/R]
TXU Corp. ((TXU)), the biggest electricity producer in Texas, announced an agreement to be acquired by a group of private-equity firms in a deal worth about $32 billion, including the assumption of $13 billion in debt. If the deal completes, it would be the largest private buyout in U.S. corporate history. It would top the previous biggest buyout of $25.1 billion set in 1988 when RJR Nabisco was bought by Kohlberg Kravis. Kohlberg Kravis Roberts & Co. and Texas Pacific Group led a consortium that included Goldman Sachs & Co. and three other Wall Street firms that will pay $69.25 per share for TXU.

The firms said they will support limits on power-plant pollution that causes global warming. They won support for the buyout from environmental groups which have consistently criticized TXU. Environmentalists agreed to sharply scale back TXU''s controversial $10 billion plan to build 11 new coal-fired power plants that would produce tons of new greenhouse gas emissions. The group also agreed to reduce electricity prices by 10% and limit prices until September 2008. TXU shares have almost doubled in value over the last two years, rising from $37.35 to Friday's closing price of $57.64. Shares of TXU Corp. climbed 13% in pre-market trading.


[R]6:30AM European markets were higher on Monday on updates, bid talk.[/R]
European markets were higher on Monday. By mid morning, Frankfurt Xetra Dax added 0.5% to 7,024.35, the CAC 40 in Paris gained 0.9% to 5,766.96 and London FTSE 100 climbed 0.6% to 6,438.3.

Advancers

Dutch television production company Endemol gained 3.1% after French luxury goods group LVMH was talking with Endemol French management about a bid. Telefonica, the Spanish telecoms group which owns 75% of Endemol, is preparing an auction of the maker of Deal Or No Deal and Big Brother within two weeks, and may allow only two rival groups to bid for the company, valued at 2.74 billion euros. Shares in LVMH were up 0.9%, while Telefonica added 0.6%.

Allianz, the German non-life insurer, gained 3.4 % as its strong full-year results last week earned it a series of upgrades. Merrill Lynch raised its rating on the company to buy, while UBS, Bear Stearns and Credit Suisse all lifted their target prices on the stock. Axa, Europe second-biggest insurer after Allianz, gained 2%, riding on the positive momentum built up after it also reported stronger-than-expected results last week.

Decliners

Danish drugmaker Novo Nordisk fell 7.5% after the company said it was not seeking regulatory approval to treat bleeding on the brain with NovoSeven after negative results in clinical trials.

Oil and gold

Crude oil for April delivery rose 31 cents to $61.45 a barrel in electronic trading on the New York Mercantile Exchange. April Brent crude on London ICE Futures exchange rose 34 cents to $61.22 a barrel. Gold for immediate delivery advanced $5.20, or 0.8%, to $687.75 an ounce, and traded at $686.65 in early trade in London.

Currencies

The [euro was nearly unchanged against the dollar on Monday as German consumer sentiment fell for a second straight month and worries about Iran's nuclear ambitions kept currencies on edge. The euro bought $1.3163 in morning European trading, nominally up from $1.3162 in New York late Friday. The British pound fell to $1.9628 from $1.9637 and the dollar also moved lower against the Japanese yen, dropping to 120.78 yen from 121.04 yen.