By Editors of Power Engineering
After being firmly blocked by the Kansas Corporation Commission, Great Plains Energy and Westar have altered the terms of the proposed Westar buyout.
The new agreement, approved by both companies’ boards of directors, would be a straightforward merger with no exchange of cash and no debt in the transaction to create a company with a combined value of $14 billion.
Westar Energy shareholders will receive 0.5981 shares of common stock in the new company for each Great Plains Energy share, while each Westar share will transfer for a full share in the new company. The swap will give Westar shareholders 52.5 percent of the company, and Great Plains Energy shareholders 47.5 percent.
The combined company would have a new name that has yet to be determined and serve 1.6 million customers in Kansas and Missouri. Mark Ruelle, president and CEO of Westar, will become the non-executive chairman of the new company board, while Terry Bassham, chariman, president and CEO of Great Plains will serve as president and CEO as well as a member of the board of directors. Senior management roles will be shared by executives from both companies.
“The logic of combining these two companies is compelling. We are confident we have addressed the regulatory concerns with our originally-proposed transaction,” said Mark Ruelle, president and chief executive officer of Westar Energy. “This merger creates a stronger company for our customers and a much more valuable company for shareholders, with no additional acquisition debt, along with sustaining commitments to Topeka and Kansas.”
Great Plains Energy previously proposed a $12.2 billion purchase of Westar, which was estimated to be $4.9 billion more than the total value of Westar’s assets.
The Kansas Corporation Commission rejected the deal and denied a petition for reconsideration, saying the purchase had the potential to create a financially weaker company.