UniSource Deal Flips a Switch in Energy Sector

Normally, it takes more than one big merger -- or even two -- to ignite talks of an industry trend.

But the utility sector has grown so cold that even one odd deal can spark heated discussions. Take the buyout recently announced by UniSource (UNS Quote). Until last month, UniSource was just another small-cap utility that had trouble pleasing even its own stockholders. Now it is being snatched up, at a rich premium, by outside investors who are accustomed to high-return thrills.

Kohlberg Kravis Roberts, a high-profile private equity group with backing from J.P. Morgan (JPM Quote) and Wachovia (WB Quote), plans to spend $853 million in cash, plus some $2 billion more in debt assumption, on the Arizona utility. If the deal goes through, it will mark one of the first times in recent history that a public utility has been taken private. ...