KAI RYSSDAL: A couple of weeks ago, we told you about a big energy deal down in Texas. KKR’s going to take TXU private in a $42 billion leveraged buyout. The biggest ever.
But that’s not what made it news. KKR had brought two leading environmental groups in on things. They managed to get some green concessions. Including convincing the new owners to scrap plans for eight new power plants. The buzz was environmentalists were getting serious about the nuts and bolts of big corporate deal-making. And there is word today one of those groups is beefing up its financial know-how. From the Marketplace Sustainability Desk, Sam Eaton has the story.
SAM EATON: The deal to slash most of TXU’s planned coal-fired power plants from its roster is still in flux.
Environmental Defense head Fred Krupp says over the next few weeks, the Texas energy giant will seek higher bids from rival suitors.
FRED KRUPP: And we just want to have expertise at our side so that no matter what happens, we’re ready to engage in a pragmatic, constructive way as an informed advocate for the environment.
Environmental Defense has hired boutique investment bank Perella Weinberg Partners. Krupp says his group may pursue similar deals with Wall Street in the future, potentially ushering in a new role for environmental groups in high-powered mergers and acquisitions.
But Yale environmental law professor Daniel Esty says that shift is being driven by Wall Street, not the environmental community.
DANIEL ESTY: Environment has emerged as a core element of strategy, and so no company can be seen to ignore this issue.
Some studies suggest a powerful link between a company’s environmental reputation and the performance of its stock price.
But Bill Kovacs with the U.S. Chamber of Commerce says keeping investments safe from environmental backlash is one thing.
BILL KOVACS: The bigger issue is, is Texas gonna have enough energy and is it going to get it in time?
TXU’s proposed coal plants would have added about 10 percent more electricity to the grid. Kovacs says making up that gap with other energy sources isn’t going to happen without some economic hardship — possibly tainting the newly forged relationship between Wall Street and environmental groups.
In Los Angeles, Ia€™m Sam Eaton for Marketplace.
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