Bringing EDF to the Table |
Fred Krupp, the President of Environmental Defense, received the first call from the Texas Pacific Group (TPG) requesting that EDF, along with NRDC, participate in the negotiations surrounding the possible buy-out of TXU. Krupp referred the call to Marston, who had been in the trenches fighting TXU's plans to build coal-fired electric generation plants in Texas. Neither Krupp nor Marston knew why these two environmental groups had been brought in at the 11th hour to possibly bless this private equity deal, though Marston had a number of hunches.
Besides wondering about TPG's motives, Krupp and Marston had to consider the pros and cons of EDF's participation in the deal. On one hand, the environmental organization faced considerable reputational risk - their blessing could be seen as "window-dressing," or worse still as "selling out." On the other, participating in the negotiations could be an enormous opportunity. Not only could these discussions lead to a reduction in greenhouse gases and other pollutants, but they could provide an opportunity to establish a model for including environmental concerns in the calculus of large buyouts. Krupp and Marston decided to take the risk to see whether they could work out a deal with the private equity firms.
Marston discusses both of these concerns in the video below.