Wall Street trio land TXU, world's biggest private equity deal

A New York triumvirate of Simpson Thacher & Bartlett, Sullivan & Cromwell and Cravath Swaine & Moore has landed instruction on what is set to be the world’s biggest private equity deal.

Simpson Thacher and Texan-headquartered Vinson & Elkins are advising Kohlberg Kravis Roberts (KKR) and Texas Pacific Group (TPG) on their $44.5bn (£22.6bn) offer for Texan utilities company TXU, advised by Sullivan & Cromwell, with Cravath advising TXU’s board.

Simpson Thacher is fresh from advising on what was previously the biggest LBO on record. Simpson Thacher advised marquee client Blackstone on its successful $38.9bn (£19.8bn) bid for Sidley Austin client Equity Office Properties, while Sullivan advised on a failed bid.

KKR and TPG are offering $69.25 in cash per share for TXU, and will assume $12bn of the company’s debt. This represents a 25 per cent premium on TXU’s closing price on Friday. The offer is being financed through bonds and the private equity houses’ own equity, added to by Goldman Sachs, Lehman Brothers, JP Morgan, Citigroup and Morgan Stanley.

Credit Suisse and Lazard acted as TXU’s financial advisers.

Covington & Burling, Hunton & Williams and Stroock & Stroock & Lavan all scored roles advising the investor group.

Although longstanding TPG adviser Cleary Gottlieb Steen & Hamilton confirmed it did have a role “on some aspects” of the bid, Simpson Thacher remained lead adviser.

At Cravath, corporate partners Richard Hall and James Woolery are advising TXU’s board and strategic committee, with litigation partner Elizabeth Grayer.

KKR and TPG are also members of the private equity consortium, advised by Clifford Chance, looking at a possible bid for J Sainsbury.