Westar Energy and Great Plains Energy, the parent company of Kansas City Power & Light, are proposing a new plan to merge, after Kansas regulators scuttled an earlier deal.
The two companies announced a deal Monday to form a utility with a combined equity value of $14 billion and holding all of the current companies' operations, The Topeka Capital-Journal reported .
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The announcement comes after the Kansas Corporation Commission in late April denied a proposed $12.2 billion sale of Topeka-based Westar to Great Plains Energy Co., which is based in Kansas City, Missouri. The KCC said the cost was too high, would leave the combined utility financially weaker than the separate companies and could cost jobs in Kansas. Westar is the largest utility in Kansas.
Under the deal, each Westar Energy share could be exchanged for a share in the new company. Great Plains shares would be worth about 60 percent of a share in the new company. No transaction debt would be incurred and no cash would be exchanged, the companies said in a news release.
"We are pleased to announce a revised agreement with Westar Energy that we believe directly addresses regulatory concerns with our originally proposed transaction, while increasing the long-term value and upside opportunity for our shareholders, customers, communities and employees," said Terry Bassham, CEO of Great Plains who will be CEO of the combined businesses.
The new, as-yet-unnamed company will provide electric utility service to about 1 million Kansas customers and nearly 600,000 customers in Missouri. The corporate headquarters would be in Kansas City.
If the merger is completed, Westar Energy shareholders will own approximately 52.5 percent and Great Plains Energy shareholders will own about 47.5 percent of the combined company.
"The logic of combining these two companies is compelling," Mark Ruelle, president and chief executive officer of Westar Energy, said. "We are confident we have addressed the regulatory concerns with our originally proposed transaction. We appreciate the Commission welcoming a different way to combine these two companies, preserving the unique value available only through this particular business combination."
The new merged company would not lay off any employees and it would keep at least 500 jobs in Westar's Topeka headquarters for at least five years, according to the news release.
Information from: The Topeka (Kan.) Capital-Journal, http://www.cjonline.com