TXU Corp. (Dallas, Texas, U.S.) has agreed to be acquired by an investor group led by Kohlberg Kravis Roberts & Co. (KKR) and Texas Pacific Group (TPG), for approximately US$45 billion, $13 billion of which is the assumption of debt.

Under the agreement, TXU Energy would provide more than $300 million in annual savings through a 10% price reduction for customers, and the number of planned coal-fueled generation units would be reduced from 11 to 3.

Two big environmental groups — Environmental Defense and the Natural Resources Defense Council — have come out in support of the acquisition, due to the scaling back of coal plants. The groups said that eco-friendly provisions in the deal signal a major change in the way Wall Street views the financial risks of global warming.

The newly privatized company would be reorganized into three separate and distinct businesses for generation, T&D and retail. The headquarters would remain in Dallas.

“The new ownership and business structure will enable us to better meet the growing energy needs of Texans,” said C. John Wilder, chairman and CEO of TXU Corp. “The long-term capital, expertise and resources of the investor group will allow us to increase our focus on reliability, lower prices, outstanding customer service and innovative products, and investments in long-term environmentally sound technology.”

Former U.S. Secretary of State James Baker will serve as advisory chairman to the investor group. William Reilly, chairman emeritus of the World Wildlife Fund and former Environmental Protection Agency (EPA) administrator, will lead TXU's effort in making climate stewardship central to corporate policies.

The deal must still undergo months of scrutiny from state and federal regulators. And in a filing with the Securities and Exchange Commission, TXU said the buyout deal contains a provision under which it can solicit competing proposals through April 16, 2007.