The decision of TXU Corp.’s to whittle down plans to build 11 coal-fired power plants to accomplish acquisition process smoothly has clearly indicated that utilities can no longer afford to ignore serious questions related to environment. In the run up to conclude the deal what can better be termed as the largest leveraged buyout in history, the private equity firms had spent two weeks in intense and extensive negotiation with powerful environment groups to eliminate any risk of expecting costly litigations related to emissions.
Environmentalists have welcomed the TXU’s decision to scrap eight out of eleven coal-fired plants, which it has earlier planned to build in Texas by the year 2010. The decision to axe the plans was taken as part of a $45 billion acquisition deal with Kohlberg Kravis Roberts & Co., Texas Pacific Group and Goldman Sachs Group.
Industry analysts in the corporate community are considering it as an indication towards some sort of new legislation to restrict carbon dioxide emissions. Obviously, the deal has outlined the fact that how this industry is struggling to cope up with customers’ power needs and potentially stricter air-quality regulations. The deal stamps the notion of a balancing act carried out by TXU.
Moreover, the deal could face months of state and federal regulatory hurdles, but analysts are arguing that since the deal has the broad support from environmentalists and other important interest groups and it should help the regulators to clear them with ease. However, a bigger question still haunting the analysts that how the newly firmed would address its constituents such as consumers and shareholders, growth-oriented politicians and environmentalists with equal ease.
