Great Plains Energy, along with Westar Energy, is asking for nearly a month to come up with a revised merger agreement that regulators might find more palatable than the $12.2 billion deal that was rejected on April 19.
In a joint statement, the utility companies said they wanted until May 31 to come up with a new deal that, if it comes to fruition, would be presented to other parties that had objected to their original proposal.
“We continue to firmly believe that combining Great Plains Energy and Westar creates significant value for customers, employees and communities in Kansas and Missouri as well as for our shareholders,” said Terry Bassham, chairman and chief executive of Great Plains Energy, parent company of Kansas City Power & Light, in a written statement.
“Since announcing this transaction, we have completed integration planning, and this work has only reinforced our belief in the value of this combination.
“By joining our companies, we together can establish a leading Midwest energy company that creates benefits for all stakeholders that neither company could achieve on its own.”
Great Plains Energy last year announced its plan to acquire Topeka-based Westar Energy for $12.2 billion. Great Plains would buy $8.6 billion of Westar equity while assuming $3.6 billion of its debt. Westar shareholders would have received $60 a share if the deal closed.
But it didn’t. Several parties filed objections ranging from purported harm to the Kansas economy with job reductions to assertions that Great Plains would be saddled with too much debt.
The utilities countered that the deal would save $2 billion over 10 years for a combined utility that would serve 1.5 million consumers. Westar serves much of eastern Kansas and the western edge of Johnson County while KCP&L serves much of the Kansas City metro not covered by ratepayer-owned utilities like those in Independence and Wyandotte County.
By April 19, the Kansas Corporation Commission, a three-member regulatory body appointed by Gov. Sam Brownback, found the arguments against the deal persuasive and voted unanimously to reject it. The ruling focused in large part on what the KCC found to be a burdensome purchase price.
“The proposed transaction is not a merger of equals, but an acquisition with an excessive purchase price, requiring (Great Plains Energy) to take on significant debt,” the KCC’s ruling said.
“We have heard the Commission regarding the structure of the transaction, including its concerns related to purchase price, capital structure, quantifiable and demonstrable customer benefits, and staffing levels in Westar’s service territory,” Bassham said in a statement. “Given the unique benefits resulting from our combination, we believe it is appropriate to explore whether there is room to work with Westar and directly address these areas, while maintaining the shareholder value creation opportunity inherent in this merger.”
David Nickel, an attorney with the Citizens’ Utility Ratepayer Board, a state agency that acts as an advocate for utility customers, said Thursday that he did not have enough information about any revised plans to say what position the board would take on another Great Plains-Westar merger plan. The board opposed the original merger proposal.
“There’s not enough information provided in the motion for reconsideration to determine what our response would be,” Nickel said.