Private equity buys TXU in record deal

Excerpts: Private equity buys TXU in record deal

  • Texas power company TXU Corp. TXU.N said on Monday it agreed to be acquired by a group led by private equity firms Kohlberg Kravis Roberts & Co. and Texas Pacific Group for $31.8 billion in the largest leveraged buyout in history.
  • The previous leveraged buyout record was the $25.1 billion takeover of RJR Nabisco, also by KKR, announced in 1988.
  • The buyout firms are paying 8.5 times EBITDA (earnings before interest, tax, depreciation and amortization) for TXU, compared with an average for the utilities industry of 7.9 times EBITDA, TXU said.
  • In addition to KKR and Texas Pacific Group, equity investors in the company will be GS Capital Partners, Lehman Brothers Holdings Inc., Citigroup, and Morgan Stanley, TXU said.

Source: Reuters