TXU's Largest Shareholder to Vote Against Merger

Franklin Resources announced yesterday that it will vote against TXU Corporation's (TXU) merger with private equity firms Kohlberg Kravis Roberts and TPG. The merger was announced in February, and the shareholder vote is scheduled for September 7. Franklin stated that the buyout price is “significantly below TXU’s current actual value,” which they attribute to the increased earnings that TXU announced in their latest quarterly filing.

The $32 billion offer is the largest leveraged buyout in history, and some investors are questioning the timing of this announcement from Franklin due to the uncertainty that has emerged in the debt markets recently, and the fact that TXU completed the "go-shop" period of the deal without receiving any superior offers.

Franklin Resources owned 4.35 percent of TXU as of March 31.

TXU 1-yr chart