Investors are awaiting the next mega deal. How about TXU Corporation (NYSE:TXU)? Such a deal would go for more than $32 billion (I think qualifies for "mega").
Well, that's the buzz – which got its spark from CNBC's M&A guru, David Faber. Apparently, the buyers are KKR and the Texas Pacific Group. The deal is supposed to be announced on Monday.
Founded in 1944, TXU is a major energy generation company. In fact, the company has been growing fairly nicely. In the latest quarterly report, earnings surged 77.7% to $1 billion. Yes, this company has a lot of cash flow to do a big-time deal.
Just a few years ago, the company was in tough shape. But current management has done a speculator job of turning things around. Part of TXU's business is regulated (that is, under utility laws). Then again, the Texas Pacific Group has a strong background in dealing with these matters. After all, one of its latest deals was the buyout of Harrah's Entertainment (NYSE: HET), which is also a heavily regulated company.
Wall Street certainly thinks a deal is near. In after market trading, TXU's stock surged 15.79% to $69.50.
Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.
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Reader Comments (Page 1 of 1)
2-24-2007 @ 7:46AM
Michael Schneider said...
Deal is confirmed. Many investors have been waiting for more takeovers in utilities for some time especially when Warren Buffett got more involved in the arena. A list of 10 utility takeover candidates presented by Dot Matthews on CNBC a while ago is still worth perusing and it is available free for those interested at www.Barrelomoney.com.
2-24-2007 @ 12:20PM
john said...
what happens to current stockholders, I wonder?
2-24-2007 @ 2:31PM
John Genuardi said...
Texas environmental groups hate TXU and want to shut down several (4?) of its coal fired power stations...saying the "carbon footprint" is too much..
but of course, they have no alternate plan for how to generate the electricity they and others need.