How Your Money Made the TXU deal happen

Most of the readers of this blog are not investors in the Texas Pacific Group or KKR, but you did have a role in making the private equity deal that has everyone in the environmental community (not to mention the private equity world) talking.

Here’s what you did: You didn’t invest in TXU Corporation (NYSE:TXU). As any regular reader of this blog knows, I’m a big proponent of putting your money where your mouth is, especially when it comes to staying away from companies whose operations would increase the severity of climate change. And, until a couple weeks ago, TXU with their 11 planned pulverized coal plants was public enemy #1 when it came to future carbon emissions.

My readers, socially responsible mutual funds, other like minded people, and other investors who were worried about carbon risk stayed away from TXU in droves, and because of that, the stock was lower (how much we’ll never know,) which made it easier for Texas Pacific and KKR to offer a 25% premium, which in turn should be enough to entice current TXU investors to give up their stock in the buyout.

It’s easy to see this deal is a back room affair between a bunch of filthy rich folks, TXU management, and the leaders of a couple national environmental groups, with the little guys (like the New York Times, who originally saw the merger as a private equity endorsement of TXU’s high-carbon generation strategy left in the dark.

The greatest risk for those of us fighting climate change is despair. Climate change is a giant problem, but we can make big changes if we all pitch in to help. To all of you who did your little part to make the deal happen (even if there are still some doubts as to the final results), I want to say,

“Thanks, and keep up the good work.”

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6 Comments

  1. Well said, Tom. I wonder which, if any, of the big publicly traded utility companies you would identify as climate-friendly?

  2. Marc:

    2 come to my mind without having to think too much about it:

    1) FPL (NYSE:FPL), which has one of the largest wind fleets in the world. It’s exposure to nuclear may, however, reflect badly on it with certain folks in the SRI industry.

    2) Pacific Gas & Electric Company, which has been very aggressive on a range of things like smart metering, renewable energy and efficiency.

  3. Trick Billards said

    PG&E is borderline in my opinion. They’ve done a great job on marketing their green praactices but also have done a great job at covering up some of their dirty work. They’ve consistently stood in the way of expanding net metering. They’ve pushed for lower tier rates for distributed generation. They almost managed to take away solar renewable energy credits from owners of solar installations. They spent half a million putting out a campaign to fight SMUD expansion and used misleading information to promote themselves (granted this could be seen as a legitimate self interest expense, but that money could have been spent on further incentive programs like SMUD’s).

    Granted they have pushed for large wind farms and are now experimenting with wave power. For me however, PG&E is just the lesser evil at this point and not the vanguard.

  4. Tom said

    For US utilities, they’re all lesser evils at this point. In addition to FPL (my fave) and PG&E, there is HE (Hawaiian Electric) which is making some good moves due to regulatory push … rather like PG&E ( the Rocky Montain Institute was called in to consult on this,) and Xcel…. see my “Five Minutes With Dick Kelley” entry.)

  5. [...] using their criteria. There is no doubt in my mind that this reasearch is valuable, and that their assets have an effect on the behaviour of companies in the market. Is it worth it? You decide every time you [...]

  6. [...] April 10, 2007 at 12:45 pm · Filed under Energy efficiency, Concentrating Solar Power, Carbon Dioxide Emissions, Nuclear Power, Coal, Global Warming A Wall Street Journal article today reposrts that TXU is planning on using nuclear power to replace the coal plants which they shelved recently. [...]

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