The largest buyout ever agreed could yet turn into a bidding war, after reports that a rival consortium was plotting to trump Kohlberg Kravis Roberts and Texas Pacific Group’s $45 billion (€34 billion) acquisition of US utility TXU.
KKR and TPG agreed in February to pay $69.25 per share to take TXU private, valuing the company at about $45 billion including debt. Since submitting the offer, KKR and TPG have been on a charm offensive, enlisting the support of environmental groups to argue in favour of the deal.
Any rival bid would probably be worth in excess of $70 per share, according to the FT, though the paper stressed that details remained sketchy and there was still a chance that no offer would materialise.
One bonus for any interested third party is that Credit Suisse, which is advising TXU, has offered a substantial staple financing package to support a competing offer.
The emergence of a rival bid team would be a further sign that the gentlemen’s agreements that previously governed private equity are a thing of the past. Previously buyout firms would rarely submit a competing offer after a deal had been agreed with another party, but with record funds to put to work firms are no longer observing such niceties. Blackstone’s $39 billion acquisition of Equity Office Properties, a US commercial real estate business, also saw a rival offer emerge after the deal had been agreed, although Blackstone went on to win the subsequent bidding war.