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TXU Shareholders Approve $32 Billion Buyout

Shareholders of TXU Friday approved a $32 billion buyout of the Texas power company by two private equity firms, turning up pressure on banks that could be left holding the deal's debt.

Dallas-based TXU agreed earlier this year to be bought by Kohlberg Kravis Roberts & Co and TPG Capital LP for $69.25 a share in the second-largest leveraged buyout ever. TXU shares were trading at $67.31, down a penny, on the New York Stock Exchange at midday.

More than 74 percent of shares were voted in favor of the deal, according to the company.

"This transaction is not only good for TXU shareholders, but also for TXU customers and residents across the state," said Donald L. Evans in a statement. The former U.S. secretary of commerce will lead the company after the deal is finalized in the fourth quarter.

Friday's approval of the deal was widely expected after major shareholder Franklin Resources Inc. reversed course last week and said it would support the buyout.

The vote ratchets up the pressure on the group of banks that agreed to provide more than $37 billion in debt financing because the dismal state of the credit markets has made it far more difficult to sell that debt to other investors.

"I think there's a lot of people involved in this deal who wish they weren't," said debt analyst Jon Kyle Cartwright of investment firm BOSC Inc.

That group of banks includes Citigroup, Credit Suisse, Goldman Sachs Group, JPMorgan Chase, Lehman Brothers and Morgan Stanley.

KKR and TPG set the financing earlier this year at what market watchers believed to be very favorable terms, but the debt market troubles could mean the banks may end up carrying much more of that debt risk than previously expected.

A spokesman for KKR would not comment on the debt financing.