Rival looms in $45bn TXU bid

A consortium of leading private equity groups has moved much closer to mounting a rival offer to trump the $45bn (£23bn) takeover of TXU, the Texas-based energy group, by Kohlberg Kravis Roberts and Texas Pacific Group.

If this consortium tables a formal offer for TXU, it could create a bidding war for the largest private equity deal on record.

It would also mark a milestone for competition among the world's largest buy-out firms, which have so far rarely sought to break up each other's deals.

According to people familiar with the matter, Blackstone,Carlyle and Hellman & Friedman may approach the TXU board with a proposal in coming weeks.

However, they cautioned that several obstacles remained and there was no guarantee that any offer would materialise.

Blackstone, Carlyle and H&F declined to comment.

KKR and TPG agreed to buy TXU for $69.25 per share, or $45bn including debt, last month. They accompanied the deal with a campaign to lobby to garner support for the transaction with environmental groups and politicians.

Under the deal, KKR and TPG agreed to give TXU a 50-daywindow, known as a "go-shop" period, to seek alternative proposals for the company. Insiders said other private equity groups and strategic buyers, as well as the Blackstone consortium, were considering making offers.

Details of the proposal being discussed by Blackstone remain sketchy but the price of a rival offer for TXU would probably exceed $70 per share.

Credit Suisse, adviser to TXU along with Lazard, is offering a "staple" financing package for the rival bidders.

TXU shares have fallen about7 per cent since late February, when the deal with TPG and KKR was announced. They closed at $62.75 on Friday.

The drop in the share price was caused by turmoil in global markets and a sense among investors that political opposition to the transaction was growing, particularly in Texas, where state senators last week advanced legislation that would allow the deal to be blocked.