TPG, KKR infrastructure deal could top EOP buyout

The private equity world could see another record broken if KKR and Texas Pacific group are able to acquire energy company TXU Corporation for $45bn, surpassing the $39bn Equity Office deal.

A investor consortium led by New York LBO shop Kohlberg Kravis Roberts and the Forth Worth, Texas-based Texas Pacific Group is close to inking a deal to acquire Texas energy concern TXU Corporation for around $45 billion (€59 billion), according to a report in The New York Times.

TXU CEO John Wilder would be included in the buyout plans, which were being considered by the company’s board on Saturday. The deal would offer $69 to $70 per share, a premium of $10 on Friday’s closing price.

If the deal goes through, the transaction would become the largest leveraged buyout of all time, surpassing last month’s buyout of office REIT Equity Office Properties by The Blackstone Group for $39 billion.

Demonstrating the growing strength of private investors—and growing interest in the energy sector—the recent reports suggest the investors would need to raise around $30 billion in debt for the TXU deal.

Dallas-based TXU has 2.4 million customers in the Lone Star state. According to the Times, TXU owns and operates one of the largest lignite coal surface mining operations, which produces 23 million tons of coal annually. The group’s portfolio has a number of nuclear and coal plants and has recently raised the ire of environmentalists groups with aggressive plans to build 11 additional coal plants in Texas.

Henry Kravis is no stranger to big deals. KKR also led the charge on the 1988 RJR Nabisco deal, which until recently was the largest private equity deal of all time. The firm paid $31.4 billion for the conglomerate.