Corporate News Blog – Great Plains Energy and Westar Energy Announce Amended Merger Agreement to Form Leading Electric Utility

LONDON, UK / ACCESSWIRE / July 12, 2017 / Pro-Trader Daily takes a look at the latest corporate events and news making the headlines for Great Plains Energy Inc. (NYSE: GXP), following which we have published a free report that can be viewed by signing up at http://protraderdaily.com/optin/?symbol=GXP. The Company and Westar Energy, Inc. (NYSE: WR) announced on July 10, 2017, a revised merger agreement to form an electric utility Company with a combined equity value of approximately $14 billion, which will operate regulated electric utilities in Kansas and Missouri. The merger was unanimously approved by the Board of Directors of both the companies. The name of the new entity is yet to be decided. For immediate access to our complimentary reports, including today’s coverage, register for free now at:

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Reports state that no premium will be paid or received by either company. As per the deal, there will neither be transaction debt nor exchange of cash. The combined company will offer services to around one million customers in Kansas customers and nearly 600,000 Missouri customers.

CEOs’ Statements

Commenting on the merger, Terry Bassham, Chief Executive Officer of Great Plains, stated:

“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.”

Mark Ruelle, President and Chief Executive Officer of Westar Energy, expressed:

“The logic of combining these two companies is compelling. We are confident we have addressed the regulatory concerns with our originally-proposed transaction. We appreciate the Commission welcoming a different way to combine these two companies, preserving the unique value available only through this particular business combination.”

Important Terms of the Revised Agreement

As per the release, Great Plains Energy’s shareholders will receive 47.5% shares and Westar Energy’s shareholders will receive around 52.5% of the common stock in the new holding company for each Great Plains Energy’s and Westar Energy’s share, respectively. The agreement is ‍structured to permit a tax-free exchange of shares. After closing the deal, the new entity is anticipated to set initial common dividend at a level which maintains current dividend for Great Plains Energy’s shareholders, whereas 15% dividend increase is expected for Westar Energy shareholder’s ‍initial common dividend. Cost savings and net operating efficiencies of about $35 million-$45 million is expected in 2018 as a result of the merger agreement, rising up to $140 million-$170 million by 2021.

Corporate headquarters of the combined company will be in Kansas City, Missouri, whereas operating headquarters will be in both Topeka, Kansas, and Kansas City, Missouri.

Membership

Following the completion of the merger, Mark Ruelle will serve as the Non-Executive Chairman, and Terry Bassham will be the President and Chief Executive Officer of the new company and will also serve as a member of the Board of Directors. Executives from both companies will occupy the senior management positions. Westar’s Senior Vice President and Chief Financial Officer, Tony Somma, will become Executive Vice President and Chief Financial Officer. Kevin Bryant, Great Plains Energy’s Senior Vice President (Finance & Strategy) and CFO, will be the Executive Vice President and Chief Operating Officer of the new entity. Westar’s Senior Vice President of Strategy, including regulatory affairs, Greg Greenwood, will serve the new company as Executive Vice President of Strategy and Chief Administrative Officer.

Win-Win Situation

The revised merger agreement is expected to augment the long-term value in terms of increase in dividends for the shareholders of both Great Plains Energy and Westar Energy, along with strategic, operational, and financial benefits for the customers, communities, and employees associated with the companies. Following the completion of the merger, both companies confirmed that there will be no job cuts.

Approvals by Shareholders and Regulatory Bodies

The transaction is subject to customary closing and consent of Great Plains Energy’s and Westar Energy’s shareholders, along with regulatory approvals from the Federal Energy Regulatory Commission, the Missouri Public Service Commission, the KCC, the Nuclear Regulatory Commission, and clearance from the Hart-Scott-Rodino Act. The deal is expected to close in the first half of 2018.

Financial and Legal Advisors

Goldman Sachs & Co. LLC, Barclays, and Lazard are the financial advisors of Great Plains Energy. Bracewell LLP acts as the legal advisor to the Company. Guggenheim Securities, LLC and Baker Botts L.L.P. are serving as the financial advisor and legal advisor, respectively, to Westar Energy.

About Great Plains Energy Inc.

Established in 2001, Great Plains Energy Inc. is the utility holding company of Kansas City Power & Light Company and KCP&L Greater Missouri Operations Company (GMO), which provides electricity to customers primarily in the states of Missouri and Kansas. As of December 31, 2016, the Company catered to approximately 534,400 customers, including around 471,900 residences, 60,500 commercial firms, and 2,000 industrials, municipalities, and other electric utilities. Great Plains Energy is headquartered in Kansas, United States.

About Westar Energy, Inc.

Westar Energy, Inc. is the largest electric utility in Kansas. It offers electric generation, transmission, and distribution services to more than 700,000 customers in central and northeastern Kansas, including the cities of Topeka, Lawrence, Manhattan, Salina, and Hutchinson.

Last Close Stock Review

On Tuesday, July 11, 2017, the stock closed the trading session at $30.05, marginally up 0.81% from its previous closing price of $29.81. A total volume of 5.50 million shares has exchanged hands, which was higher than the 3-month average volume of 2.92 million shares. Great Plains Energy’s stock price advanced 2.95% in the last one month, 3.02% in the past three months, and 9.00% in the previous six months. Furthermore, since the start of the year, shares of the Company have gained 9.87%. The stock is trading at a PE ratio of 22.53 and has a dividend yield of 3.66%. The stock currently has a market cap of $6.46 billion.

At the close of trading session on Tuesday, July 11, 2017, Westar Energy’s stock price rose slightly by 0.77% to end the day at $50.80. A total volume of 2.62 million shares was exchanged during the session, which was above the 3-month average volume of 965.97 thousand shares. The Company’s shares are trading at a PE ratio of 21.31 and have a dividend yield of 3.15%. At Tuesday’s closing price, the stock’s net capitalization stands at $7.24 billion.

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