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With Two Weeks Left In Go-Shop Period, TXU Says It Expects No New Bids

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If the world seems a little bit brighter today that might be because you’re sitting somewhere near David Bonderman. The head of Texas Pacific Group is there in his suit—maybe it’s that wide-lapelled, sack-ish green number he likes to wear—his tie twisted, its front resting against his chest and its seam showing. (He’s not a slob but being Bonderman means having more on your mind than whether or not your tie rests just so.) And he’s probably smiling wide enough to throw light in a RIM blackout-sized radius. (Read: the whole western hemisphere.)
Texas power giant TXU Corp. has just announced that it is proceeding with plans to be bought out by Bonderman’s firm and Kohlberg Kravis & Roberts. Bonderman never really doubted the deal would go through but he had to smile when he got the news that with two weeks left in its “go-shop” period to look for other buyers, TXU was throwing in the towel and taking his bid. There was never much chance that serious rival bids would emerge for TXU. All those stories about Bonderman’s connections to the environmental groups supporting the buyouts, about behind the scenes deals with Texas lawmakers and regulators, no doubt sent the message to other private equity shops that
the fix was in. These guys had this deal wrapped up. No one else had the connections.
If that weren’t enough to stymie the ambitions of the Steve Schwarzman’s and Leon Black’s of the world, there were all the stories about resistance to the deal from greens, lawmakers and regulators. Who would want to step into that mess? The more trouble the TPG-KKR bid had, the less attractive the deal seemed to competitors. Worse was better.
In a sense it was all a bluff because the logic behind the TXU buyout has always been deceptively simple. The management of the power company had made itself too many enemies in Texas to succeed. It was partly bad public relations, partly a failure to build the right relationships, and partly an inevitable cost of running a power company in an age of rising energy prices, sprawling suburbs and growing environmental concerns. The management had become toxic.
A new management—under new owners—stood a chance to make the company work simply by not being the old guys. It was—it is—really that simple. The plan was to get rich by being someone else. In this case, by being David Bonderman.
TXU receives no superior offer and sticks with KKR [Reuters]