Deal would become the largest buyout by private company

The deal would give shareholders a 15 percent premium.
DALLAS (AP) -- TXU Corp., Texas' largest electricity producer, said Monday it has agreed to be sold to a group of private-equity firms for about 32 billion in what would be the largest private buyout in U.S. corporate history if shareholders and regulators go along.
Kohlberg Kravis Roberts & amp; Co. and Texas Pacific Group led a group that included Goldman Sachs & amp; Co. and three other Wall Street firms that will pay 69.25 per share for TXU. They will also assume about 13 billion in debt.
The firms won support for the buyout from some environmentalists who have criticized TXU by agreeing to sharply scale back TXU's controversial 10 billion plan to build 11 new coal-fired power plants that would produce tons of new greenhouse gas emissions.
They also agreed to cut electricity prices 10 percent, which they said would save TXU residential customers more than 300 million per year, and limit prices until September 2008.
TXU directors voted Sunday night to recommend that shareholders approve the sale. The price represents a 15 percent premium to TXU's closing stock price Friday. TXU shares rose 8.07, or 13.5 percent, to 68.09 in midday trading on the New York Stock Exchange after briefly reaching a new 52-week high of 68.45.
Current record
The deal would top the previous biggest private buyout ever of 25.1 billion set in 1988 when RJR Nabisco was acquired by Kohlberg Kravis.
TXU officials said the company would get a 1 billion break-up fee if the buyers can't close the sale. TXU also has until mid-April to shop for better offers, although the buyout firms would get a chance to trump any new bids.
Private-equity firms have often steered clear of utilities, viewing them as highly regulated businesses with relatively low return on investment. But Texas deregulated its electricity market in 2002, and TXU is generating tremendous amounts of cash and profit -- Wall Street expects the company to report Tuesday that it earned about 2.5 billion in 2006.
TXU, with more than 2.3 million customers, has prospered because electric rates in Texas are tied to the price of natural gas while TXU generates much of its power more cheaply at coal and nuclear plants.
Still, TXU had flaws that might make buyers think twice. Many Texas consumers have switched to other companies that sell electricity for less, although most of TXU's longtime customers have stood by it.