Utility TXU agrees to $32 billion buyout

"This came completely out of right field," he said. But he added that power companies make logical targets for private-equity buyers who have been on a shopping spree the last couple years.

"This is the perfect match for them," Wilder said. "It's risky, it's long-term, it's complex, it requires a lot of capital and a lot of creativity. That's the style of investing they like to do."

Wilder's future was unclear. He said he has not signed a contract to stay with the company.

But the CEO's contract could let him walk away with more than $140 million in cash severance, early vesting of performance units and restricted stock awards, and distribution of trust shares, according to Paul Hodgson, a senior research associate at The Corporate Library, which tracks governance and compensation.

If federal regulators and TXU shareholders approve the sale, it would be the largest private buyout ever, surpassing Kohlberg Kravis's $25.1 billion takeover of RJR Nabisco in 1988.

Federal regulators may have limited ability to examine the deal because utilities that belong to the agency that runs most of the Texas power grid are not subject to federal oversight — unlike power companies in the rest of the country.

A spokesman for the Federal Energy Regulatory Commission said by e-mail that federal regulators haven't determined whether they will review the deal.

Nuclear regulators are expected to review the sale, said a TXU spokeswoman. TXU said no approval was needed from state regulators.

TXU serves 2.3 million customers, mostly in the Dallas-Fort Worth area, and competes against other power producers in the deregulated Texas electric market as far afield as Houston.

TXU lost about 5.5 percent of its retail customers in the 12 months ended last Sept. 30. Still, the company has prospered because electric rates in Texas are tied to the price of natural gas while TXU generates much of its power more cheaply at coal and nuclear plants.

That's led state lawmakers to grill company officials over their rates — especially at a time when analysts are forecasting TXU earned about $2.5 billion in 2006. TXU is scheduled to release its full-year results on Tuesday.

While investors, customers and environmentalists found something to like in the deal, one group that could be disappointed are bondholders.

Fitch Ratings downgraded TXU's credit, and Moody's Investors Service and Standard & Poor's warned they could do the same. The agencies warned that TXU was likely to take on much more debt to finance the sale and has been losing customers.

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