M&A

Great Plains Energy to Buy Westar Energy for $8.6B

Among investor-owned utilities, the combined company would have one of the largest portfolios of wind generation in the country.
Katie Kuehner-HebertMay 31, 2016

Great Plains’ deal to buy rival Westar Energy, announced on Tuesday, is the biggest proposed acquisition in the U.S. power distribution market in 2016.

Great Plains, the parent of regulated power utility Kansas City Power & Light, said it would acquire Topeka-based Westar in a combined cash and stock transaction worth about $12.2 billion, including total equity value of about $8.6 billion and the assumption of about $3.6 billion in Westar’s debt. Upon closing, Westar would become a wholly owned subsidiary of Great Plains.

Once the transaction is complete, Great Plains would have more than 1.5 million customers in Kansas and Missouri, nearly 13,000 megawatts of generation capacity, almost 10,000 miles of transmission lines, and more than 51,000 miles of distribution lines, the company said. In addition, more than 45% of the combined utility’s retail customer demand would be met with emission-free energy.

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“The combination of our two companies is the best fit for meeting our region’s energy needs,” Great Plains’ chairman and chief executive Terry Bassham said in a press release.

Currently, Great Plains and Westar jointly own and operate the Wolf Creek Nuclear Generating Station, as well as the La Cygne and Jeffrey power plants. In addition, among investor-owned utilities in the country, the combined company would have one of the largest portfolios of wind generation.

“Falling demand for electricity in both open and regulated markets due to increased energy efficiency and a weak economy has led to several deals as U.S. utilities look to cut costs and diversify their portfolios,” Fortune wrote. “This year, Dominion Resources said it would buy Questar for about $4.4 billion and Exelon closed its $6.8 billion merger with Pepco Holdings.”

Great Plains and Westar anticipate making the required regulatory filings with the Kansas Corporation Commission and other regulatory entities during June and July, and then the two would seek shareholder approvals later this year. The transaction is also subject to approvals from the Federal Energy Regulatory Commission and the Nuclear Regulatory Commission. The companies expect the transaction to close in the spring of 2017.

Westar shares rose about 7.5% to $56.89 in trading on Tuesday, below the total offer price of $60 per share.