Utilities Thankful for Mergers

Major utility assets -- and even entire utilities -- have become hot items this holiday season.

In recent weeks, buyers have begun aggressively shopping for bargains in a utility sector that only last year resembled the land of misfit toys. They have spent billions of dollars -- and intend to spend billions more -- on big-ticket items that once seemed destined for the lowly discount bin.

In mid-November, private investors backed by Texas Pacific Group agreed to pay $2.35 billion for a struggling Portland utility owned by bankrupt Enron. Then, less than two weeks later, a second investor group led by Kohlberg Kravis Roberts stepped up with a generous bid on a utility that's already on the mend. KKR offered $3 billion -- or a 30% premium -- for UniSource Energy (UNS Quote), a small-cap utility that was flirting with bankruptcy a decade ago. ...