Merger Proposal Between Westar Energy And Great Plains Energy Worth $14 Billion
Kansas’ largest electric utility, Westar Energy, is proposing a merger with Great Plains Energy to create a new company worth about $14 billion.
The deal comes less than three months after a Kansas regulatory agency rejected the original plan to have Great Plains buy Westar.
The new company headquarters would be in Kansas City, Missouri. Westar’s presence and about 500 employees would remain in Topeka as one of two operating headquarters. The other will be in Kansas City, Mo.
Westar’s call center in Wichita will remain open, and the company will establish new walk-in customer service centers in Wichita and Topeka.
Westar’s Gina Penzig says if the merger is approved, the transition will be seamless for customers.
"If there’s a storm that goes through and your lights go out, you’ll still call the same number and a local crew that will come out and make those repairs," Penzig says. "If you have a question about your bill, you’ll still call and get our call center in Wichita and somebody will help you with that.
Westar and Great Plains call the deal a “stock-for-stock merger of equals.” The proposal, announced Monday, comes less than three months after the Kansas Corporation Commission rejected a proposal for Great Plains to buy Westar for $12.2 billion. The agency said the cost was too high, would leave the combined utility financially weaker than the separate companies and could cost jobs in Kansas.
Penzig says there will be no layoffs related to the merger proposal.
"The expectation is that we are going to use natural attrition and normal retirements to gain those types of efficiencies over time," she says.
Penzig says the merger addresses the regulatory concerns with the original acquisition proposal because no premium will be paid or received with respect to either company, there will be no transaction debt or exchange of cash, and no voluntary job loss due to the transaction.
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 new company will have nearly 1.6 million customers in Kansas and Missouri.
Great Plains Energy is the parent company of Kansas City Power & Light.
The combined utility will have one of the largest wind generation portfolios in the country.
Penzig says combining Westar and Great Plains creates a more diverse and sustainable generation portfolio.
She says the new utility will be a leader nationally in renewable energy.
"Our combined portfolio of generation will continue to provide our customers about a third of their electricity from renewable sources, mostly wind," Penzig says. "Then when you add in the emissions-free energy from Wolf Creek [Generating Station, a nuclear power plant near Burlington, KS], then you get about half of their energy from carbon-free sources."
The deal needs approval from regulators and shareholders and is expected to close in the first half of 2018.
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