An influential shareholder advisory firm, Institutional Shareholder Services Inc., recommended Tuesday that TXU Corp. investors vote in favor of the proposed buyout deal for the utility.

The service concluded that the $45 billion offer from takeover artists Kohlberg Kravis Roberts & Co. and TPG is favorable for shareholders – thanks to impeccable timing in regard to the credit cycle. Institutional Shareholder Services based its analysis on TXU's shareholder proxy statement.

Shareholders are set to vote on the deal at a meeting Sept. 7. Approval requires two-thirds of shares to vote "yes." Already, one major investor, holding 5 percent of outstanding stock, has declared the deal a dud.

ISS says in its report that "it appears that KKR and TPG were able to price the TXU buyout by locking in financing at the top of the credit cycle."

"In addition," ISS says, "the sponsors, with their Rolodexes filled with the powerful and connected (e.g., Don Evans, the former commerce secretary, will serve as non-executive chairman of TXU), were able to adroitly navigate the legislative and environmental minefield surrounding TXU."

The new assessment could tip the scales in favor of the deal. Also, TXU has been visiting major investors to convince them of the merits of the $69.25-a-share offer, and reminding employees to vote.

Any shares not voted count against the deal.

TXU's largest shareholder, Franklin Resources Inc., said recently it would vote against the buyout because the price isn't high enough. But that was before the credit markets collapsed, making a deal in the hand look pretty good to some observers.

ISS said the TXU offer compares favorably with similar transactions – and might be the best offer likely to come, given the changing credit landscape. "If we have indeed passed the credit cycle peak, then it follows that at least some value will be irretrievably lost if TXU shareholders vote against the proposed transaction."

Three other proxy advisory firms have recommended the deal: Glass Lewis, Egan-Jones and Proxy Governance. TXU and the buyout group have said they expect to close the transaction by the end of this year.

TXU shares rose 0.7 percent on Tuesday to close at $66.19.