Great Plains Energy to Acquire Westar Energy in Deal Worth $12.2 Billion
Kansas City-based Great Plains Energy has agreed to purchase Westar Energy-Kansas' largest electric utility-in a combined cash and stock transaction with an enterprise value of about $12.2 billion.
The deal was announced on May 31. When complete, Westar will become a wholly owned subsidiary of Great Plains Energy, which also owns Kansas City Power and Light Co. (KCP&L).
"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, chairman and CEO of Great Plains Energy and KCP&L.
Westar Energy and Great Plains Energy jointly own and operate the Wolf Creek Nuclear Generating Station and two coal-fired power plants-La Cygne and Jeffrey. Jeffrey was POWER's first Water Award winner, selected in 2014 for its constructed wetland treatment system.
"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.
With the addition of Westar's generation fleet, Great Plains Energy will have nearly 13 GW of capacity. The combined company will serve more than 1.5 million customers, with almost 10,000 miles of transmission lines and more than 51,000 miles of distribution lines. It will also have one of the largest wind generation portfolios of all U.S. investor-owned utilities.
Great Plains Energy expects the acquisition of Westar to create operational efficiencies and future cost savings consistent with its past experience. In 2008, the company acquired and successfully integrated Aquila-an electric utility that served customers in adjacent areas of Missouri-into its fold. Great Plains Energy said the savings delivered by that deal exceeded its initial expectations.
"This is an important day for Westar, our customers, employees, shareholders, the communities we support and for the state of Kansas," said Mark Ruelle, president and CEO of Westar. "Our commitment to reliability, customer satisfaction, safety and sustainability is consistent with Great Plains Energy's values, which makes them our ideal partner. We're eager to join the Great Plains Energy team, and excited about this new chapter that combines the unique strengths of our respective organizations to form an even stronger company for our state."
Once the transaction is completed-which Great Plains Energy expects by spring 2017, assuming approval by shareholders and multiple regulatory entities-Bassham will become the chairman and CEO of the combined company. Great Plains Energy will add one director to its board of directors from Westar's board. The operating headquarters for the Kansas service territory is expected to remain in Topeka.
-Aaron Larson, associate editor (@AaronL_Power, @POWERmagazine)
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