From the Kansas City Star
The parent company of Kansas City Power & Light has struck a new merger deal with Kansas’s largest electric utility aimed at resolving objections that killed their previous deal.
Westar Energy Inc., based in Topeka and serving 1 million customers in the Sunflower State, would merge with Great Plains Energy Inc., the Kansas City-based parent of KCP&L.
“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 deal, valued at $14 billion, would involve forming a new company to hold all of the current pair’s operations. It would take on a new name, as yet undecided.
It would not spend any cash to accomplish the deal. It would take on no debt to make the merger happen.
The new company also would be more than half owned by the current shareholders of Westar, according to an announcement Monday.
Last year, Great Plains and Westar announced a $12.2 billion plan to merge, which included Great Plains assuming $3.6 billion in Westar debt.
The deal was turned down in April after the board of the Kansas Corporation Commission sided with its staff and several other objectors, finding that Great Plains would take on too much debt and the deal would cost too many jobs.
Both utilities have maintained that they’re better off as one company with local employees and executive staffs rather than running the risk of being acquired by an out-of-town concern.
Monday’s announcement said the new merged company would lay off no employees as a result of the merger, and that it would keep at least 500 jobs in Westar’s Topeka headquarters for at least five years.
Combined, the companies have about 5,120 employees, including about 2,900 represented by unions.
Kansas City would be the new company’s headquarters but both cities would “have the kind of jobs you would expect to find in a headquarters” after the merger, Bassham told investors during a conference call Monday.
That is because each will serve as an operations headquarters after the merger.
Customers will share $50 million in credits that the companies plan to offer even before they’ve been able to take advantage of expected cost savings from the merger.
Bassham said cost savings would be substantial enough to cover not only the $50 million in credits but also help avoid future rate increases after the merger.
The news pushed shares of Great Plains Energy 82 cents higher to $30.07, a 2.8 percent gain, in morning trading. Investors punished shares of Westar, cutting their price by $2.24, or 4.2 percent, to $50.89, with the elimination of hopes for a premium buyout offer.
