TXU Corp. shareholders Friday approved the leveraged buyout of the company by Texas Energy Future Holdings LP (TEF), marking the largest such deal to date.
More than 340 million shares, or more than 74% of the 461 million total outstanding shares of TXU common stock, were voted in favor of the merger agreement. Approval required a vote of two-thirds of outstanding shares. Of the shares voted on the merger, more than 95% voted in favor.
Upon close of the merger, TXU shareholders will be entitled to $69.25 in cash for each TXU common share. The merger, which requires approval by the Nuclear Regulatory Commission and completion of other customary closing conditions, is expected to close in the fourth quarter.
“We are pleased that the shareholders have demonstrated with their votes that they agree with the board’s recommendation that the merger is in their best interests,” said TXU Corp. chairman and CEO C. John Wilder. “We will remain diligent in our efforts to obtain the additional regulatory approval and to close the transaction as soon as possible.”
Additionally, at TXU’s annual meeting shareholders elected as directors Leldon E. Echols, Kerney Laday, Jack E. Little, Gerardo I. Lopez, J.E. Oesterreicher, Michael W. Ranger, Leonard H. Roberts, Glenn F. Tilton and C. John Wilder.
Shareholders also approved the selection of Deloitte & Touche LLP as TXU’s independent auditor for 2007 and rejected two shareholder proposals — one related to TXU’s adoption of quantitative goals for emissions at its existing and proposed generating plants, and another requesting a report on TXU’s political contributions and expenditures.
TEF was formed by a group of investors led by Kohlberg Kravis Roberts & Co. (KKR) and Texas Pacific Group (TPG) for the transaction. The buyout was announced in February and marked the largest private equity buyout in history. From the time of its announcement the deal attracted an abundance of controversy among utility regulators, Texas lawmakers, environmentalists and consumer groups, and spawned a number of political missteps by TXU management and deal backers, as well as lawmakers and regulators.
When they announced the buyout, the deal’s backers appeared to have gotten out in front of the related environmental issues by striking a deal with environmentalist groups to quash plans for seven of 11 planned coal-fired power plants. One of those groups was Environmental Defense, which Friday praised the deal and its completion.
“We eagerly support the new owners and their willingness to work with Environmental Defense and the environmental community,” said Jim Marston, regional director of the group’s Texas office. “I am eager to participate in the Sustainable Energy Advisory Committee that will guide the new company in making sound environmental decisions in the future. It’s a good deal for Texas, and even better deal for the nation, and a big step in our efforts to reduce global warming emissions.”
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