The announced deal for Texas energy giant TXU (NYSE: TXU) earlier in the week would let KKR and Texas Pacific Group snatch the "largest buyout deal ever" award (and the gold star) from rival Blackstone. With a $45 billion enterprise value, the deal easily tops Blackstone's recently inked deal for Equity Office Properties.
Earlier in the week, Blackstone said that it would not launch a counterbid against KKR and TPG. Part of the reason may have been that finding a financing source for a proposal would have been difficult -- the list of firms already involved with the deal reads like a who's who on Wall Street. But that hurdle is now gone.
Reports last night suggest that Credit Suisse (NYSE: CS) may be willing to cough up more than $40 billion to back a competitive bid. Wasn't there a time when LBO shops had to go out and solicit financial backing? I'd like to know if CS is offering a free toaster with that $40 billion loan.
So will Blackstone -- or another financial bidder, for that matter -- go in for a competitive bid? Even though these guys have been surprising left and right lately, I doubt it. Blackstone did have to fight off another suitor for EOP, but the competitor was Vornado Realty (NYSE: VNO), a strategic bidder that may have been able to realize some operational leverage from joining with EOP.
Given the ugly approval process KKR and TPG still have to wade through, Blackstone and others may not see the value in shifting money and resources toward a competitive bid. If the deal does go through, it may set a precedent that other shops could use going forward to take down similar deals.
Besides, Blackstone's CEO, Stephan Schwarzman, has already said that he sees the possibility of a $50 billion buyout by year's end, so why would he waste his time on a lousy $45 billion deal?
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Fool contributor Matt Koppenheffer could use a $40 billion loan -- any takers? You can visit Matt's blog on CAPS. He does not own shares of any of the companies mentioned. The Fool's disclosure policy is always high-powered.
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