The Jeffrey Energy Center, a 1,857-MW coal-fired power plant in St. Marys, Kansas, is jointly owned and operated by Great Plains Energy and Westar Energy. Great Plains on Tuesday announced plans to buy Westar for $8.6 billion.
Great Plains Energy, the parent company of Kansas City Power & Light, said Tuesday it has reached a “definitive agreement” to acquire Westar Energy, the largest electric utility in Kansas, for $8.6 billion.
The acquisition will give Great Plains more than 1.5 million customers in Kansas and Missouri, nearly 13,000 MW of generation capacity, and more than 61,000 miles of transmission and distribution.
The boards for both companies have approved the deal, which would pay Westar shareholders $60 per share of common stock, 13 percent above Westar’s closing price of $52.92 on Friday. The deal, which is expected to close in the spring of 2017, still requires shareholder and regulatory approvals.
The combined company will have one of the largest portfolios of wind power in the nation, Great Plains said in a press release. More than 45 percent of the new utility’s demand for power will be met with “emission-free” generation, the company said. The additional diversity and sustainability will give the new utility more flexibility in mitigating the cost of complying with new limits on carbon dioxide emissions.
Terry Bassham, chairman and chief executive officer of Great Plains, said the union will mitigate the rising cost of centralized power for more than 900,000 customers in Kansas and more than 600,000 customers in Missouri.
“The utility industry is facing rising customer expectations, increasing environmental standards and emerging cyber security threats,” Bassham said. “These factors, coupled with slower demand growth for electricity, are driving our costs and customer rates higher. Our acquisition of Westar will create operational efficiencies and future cost savings that will benefit all involved – customers, shareholders, employees and the communities we serve.”
According to The Wall Street Journal, the deal includes termination fees ranging from $80 million to $380 million. Those fees would be paid under the following scenarios:
- $80 million paid to Westar, if Great Plains shareholders fail to approve the issuance of Great Plains common stock
- $280 million paid to Great Plains, if Westar terminates the agreement because of a better deal from another buyer
- $380 million paid to Westar, if the deal is not approved by regulators by May 31, 2017 (subject to a six-month extension under certain scenarios)