By Ted Caddell
Great Plains Energy, the parent of Kansas City Power and Light, announced Tuesday it would buy Westar Energy for $12.2 billion in a deal that will give Great Plains a customer base of 1.5 million in Kansas and Missouri, nearly 13,000 MW of generation and 10,000 miles of transmission lines.
Great Plains will pay $8.6 billion in cash and stock while also assuming $3.6 billion in Westar debt.
Under the terms of the agreement, Westar shareholders will receive $60/share, consisting of $51 in cash and $9 in Great Plains common stock. Westar closed at $52.92/share on Friday.
Talk of a Westar acquisition has been percolating through the industry for weeks, with Ameren named as one of the potential buyers. Bloomberg reported earlier in the month that an investment group from Canada was also eyeing Westar.
But it was Great Plains that clinched the deal. Great Plains and Westar currently co-own and operate the 1,200-MW Wolf Creek Nuclear Generating Station, as well as the 1,418-MW La Cygne and 2,155-MW Jeffrey coal plants.
“Westar and KCP&L are trusted neighbors and have worked together for generations in Kansas. The combination of our two companies is the best fit for meeting our region’s energy needs,” said Terry Bassham, CEO of Great Plains Energy and KCP&L.
“This is an important transaction for Kansas and our entire region. By combining our two companies, we are keeping ownership local and management responsive to regulators, customers and regional needs, while enhancing our ability to build long-term value for shareholders.”
Bassham said the merger would create efficiencies that would help reduce future rate increases resulting from increasing environmental standards, cybersecurity threats and slow demand growth.
Great Plains, which operates as KCP&L and KCP&L Great Missouri Operations, has been growing. In 2008, it acquired Aquila, an electric utility that operated adjacent to its territory in Missouri. Headquartered in Kansas City, Mo., it has more than 838,000 customers in Missouri and Kansas and owns about 6,446 MW of generation.
Westar, based in Topeka, Kan., has about 700,000 customers in east and east-central Kansas and about 6,267 MW of generation, mostly coal fired.