TXU is one of the most environmentally unfriendly companies in the world, and the enormous amount of bad press that it’s been getting as even spilled over onto banks such as Citigroup, Merrill Lynch, and Morgan Stanley.
Now, of course, TXU looks as though it’s going private, in what will be, if it closes, the largest private-equity deal of all time. Makes sense, no? Public companies get damaged by shareholder activism — TXU’s share price fell from $67 to $53 largely as a result of worries over the PR risks involved with TXU’s plans to build 11 new coal-fired power stations. Private companies, on the other hand, tend to be more immune to such pressures.
But in an interesting twist it turns out that the private-equity buyers of TXU, which include Goldman Sachs and Texas Pacific, are into saving the environment too. Reports Andrew Ross Sorkin:
Goldman Sachs has been a longtime proponent of reducing carbon emissions. Its former chief executive, Henry M. Paulson, now the secretary of the treasury, was also the chairman of the Nature Conservancy, an environmental activist group.
Texas Pacific’s co-founder, David Bonderman, is member of the board of the World Wildlife Fund, and Mr. Reilly is chairman emeritus. Mr. Bonderman called Mr. Reilly to help work on the deal and create what they ultimately called The Green Group, a committee of advisers that included Mr. Reilly, Roger Ballentine of Green Strategies and Stuart E. Eizenstat, the former chief domestic policy adviser for President Jimmy Carter.
“We didn’t want to be on the wrong side of history,” said a person involved in the bidding group who was not authorized to talk about the transaction before its formal announcement.
If TXU gets taken private, most of those 11 new coal-fired plants will be scrapped. Coal-fired plants will still be built, of course, but at least the most egregious offender on that front — TXU — won’t be nearly as much of the problem as it would have been if it stayed public.