New York, Oct. 3 (Reuters): NRG Energy Inc has said it will buy Texas Genco Holdings Inc for $5.8 billion in cash and stock, in a deal that would nearly double the merchant power producer’s asset base and give it entry to the growing Texas wholesale electricity market.

The deal may also spark a new round of consolidation among merchant energy producers, which are still recovering from a credit crunch in late 2001 that drove several large independent power producers, including NRG, into bankruptcy.

Private equity firms Texas Pacific Group, Kohlberg Kravis Roberts & Co, Blackstone Group and Hellman & Friedman bought Texas Genco last summer for $3.7 billion, using $900 million of their own cash and the rest in debt to snap up the group of Texas-area power plants.

NRG and Texas Genco said in a statement that NRG will pay $4 billion in cash, $1.8 billion in stock, and assume more than $2.5 billion of Texas Genco debt. The deal marks a nice payout for the private equity firms, who stand to make more than five times their investment.