All of the stuff we’ve read about the TXU deal has been somewhat interesting—it’s the biggest deal ever, it has a “green” aspect to it, it involves possible insider trading—but failed to grip us. We couldn’t figure out why and were actually kind of upset about it—everyone else had themselves in a tailspin over THE BIGGEST BUYOUT ever, so why couldn’t we join the fun? Were we dead inside? Then, we realized, the problem with all the previous stories on the deal were that they failed to grab us, generally, because they failed to grab US, specifically. Which is to say—none of the stories talked about TXU from a “me” angle. Luckily, David Weidner at Market Watch sensed our needs and responded accordingly, detailing today, all the people—besides the obvious ones—who will be thinking of Texas fondly later this year (those rabbit fur mufflers aren’t going to pay for themselves).
Forget China. Private equity runs Wall Street these days and it is keeping the big banks busy. As long as money is cheap, firms like Kohlberg Kravis Roberts & Co. and Texas Pacific Group are going to make the bankers and lawyers rich. A few of us in the shareholding public might do OK, too.
Way back on Monday, the big news was that six firms had a deal to buy Texas utility TXU Corp. for $32 billion, not including another $12 billion in debt. For those who remember, it was the biggest leveraged-buyout in history - finally bigger than RJR Nabisco, without the debt - and the first utility deal for private equity.
It also meant another huge payday for Wall Street - especially for six banks that advised or financed the deal, or did both. M&A advisory fees could come close to $300 million, based on the fees paid on deals of more than $10 billion in recent years, and legal fees could be above the usual time billed considering the regulatory and political hurdles facing the deal.
To get the deal done, TXU and the KKR and Texas Pacific-led buyout group brought in some of the biggest dealmakers in the business. Estimates put the number of senior bankers and attorneys who worked directly on the deal at 50.
A Texas-sized deal [Market Watch]
(We also enjoyed the piece for its inclusion of this 'graph, but only because we have a 5th grade and distinctly British sense of humour:)
With assistants crowding the talks, the number of dealmakers dispatched to Dallas totaled more than 100. Reservations at the Gaylord Texan, the tony resort in Grapevine, Texas, where the deal was hammered out, became hard to come by, according to people involved in the talks. A few celebratory toasts were made at the Silver Bar, one of the resort's watering holes.