TXU to begin pushing buyout to shareholders

By Lisa Lee

NEW YORK (Reuters) - Texas power company TXU Corp. TXU.N, making a final push to win support for its $32 billion buyout, said on Monday it would probably split into three separate businesses if the proposed deal failed.

The company has set a Sept. 7 shareholder vote, where it would need two-thirds approval to go ahead with its proposed sale to a group led by private equity firms Kohlberg Kravis Roberts & Co. KKR.UL and TPG TPG.UL, formerly known as Texas Pacific Group.

TXU's management team, led by Chief Executive John Wilder, on Monday began a series of meetings with top investors on the merits of the buyout bid.

The deal has encountered opposition from the company's largest shareholder, money manager Franklin Resources Inc. (BEN.N: Quote, Profile, Research, Stock Buzz), which said the offer price was too low. TXU said it was scheduled to meet with Franklin Resources as part of the final push.

In a presentation to investors, TXU said the buyout's 25 percent premium was meaningful and superior to alternative options, including a stand-alone plan that would separate the company into three distinct businesses.

TXU's three core units are transmission, generation and retail electricity.

Franklin Resources said last month it believed TXU's stock would have performed better since February, when it agreed to the buyout, if there had been no deal.

Other shareholders say the price is fair and see no better options in the horizon, especially given the current turmoil in the credit markets.