The Time's Right for TXU

Whether a 22% equity ratio is sufficient to pass regulatory muster is a major hurdle for the proposal, says Seitz.

The move marks a sharp turnabout for TXU, whose shares traded in the single digits just five years ago. The company said the buyout would allow it to "set a new direction as a private company."

A press release pledged that "as a result of this transaction, the newly privatized company will deliver price cuts and price protection benefits to electric customers, strengthen environmental policies, make significant investments in alternative energy and institute corporate policies tied to climate stewardship."

Flush with cash, private equity firms have been on a buyout binge over the past year. Large recent deals have included Blackstone Group's purchase of Equity Office Partners(EOP Quote) for $34.5 billion, including debt.