By Tom Kleckner
A publication that covers financial mergers and acquisitions said Friday that NextEra Energy is toying with the idea of acquiring Kansas City utility Evergy.
According to M&A by Reorg, recent activist pressure from Elliott Management, which manages funds that own an economic interest equivalent to approximately 10 million shares of Evergy’s common stock, may make the company more willing to consider a sale.
NextEra has hired Citi to advise on the potential acquisition, and internal evaluations are at the preliminary stages, according to the report.
The publication said American Electric Power and Ameren are also said to be interested in Evergy.
NextEra declined to comment, following its policy to not respond to market rumors.
The Florida-based company failed in a 2016 effort to buy Texas utility Oncor. (See Texas Commission Denies NextEra’s Bid for Oncor.)
AEP and Ameren also declined to comment. Ameren did note it is focused on executing its strategic plan, which is based on “strong organic growth” in its regulated businesses.
Evergy announced in early March that it had reached an agreement with Elliott to establish a new strategic review committee to explore ways to improve shareholder value. Elliott said at the time that Evergy is now “well positioned to significantly increase investment in critical electric infrastructure to benefit key stakeholders.”
Evergy also agreed to add two new independent directors to its board, raising the number of directors to 17. The board’s membership will be reduced to 13 by retirements before the May shareholders’ meeting.
The two new directors, former Energy Future Holdings senior executive Paul Keglevic and NRG Energy CFO Kirk Andrews, will comprise half of the Strategic Review & Operations Committee, which will look at “potential strategic combination(s)” or a modified long-term standalone operating plan. It can retain its own independent consultants, advisers and counsel to facilitate its review and has an information-sharing agreement with Elliott.
“Elliott recognizes our commitment to serving the best interests of all Evergy stakeholders,” Evergy CEO Terry Bassham said in the announcement. “We welcome these new, highly qualified directors and the significant and valuable experience they bring to this effort. The comprehensive strategic and operating review we are undertaking will help ensure that Evergy is directing capital to the greatest opportunities and continuing to consider all opportunities to enhance shareholder value.”
Evergy, an SPP member, was created in 2018 by a merger between Kansas City Power and Light and Westar Energy. It serves 1.6 million customers in Kansas and Missouri.
