Westar shareholder sues to block merger with KCP&L parent company

A shareholder of Topeka-based Westar Energy Inc. has sued, hoping to stop its $14 billion merger with the parent of Kansas City Power & Light Co.

The complaint by Robert L. Reese claimed “deal protection devices” in the merger agreement limit other potential bidders from challenging the deal with Kansas City-based Great Plains Energy Inc. It specifically cited “restrictive ‘fiduciary out’ provisions,” a “no solicitation provision,” and Great Plains’ right to match any “superior proposal,” among others.

“By agreeing to all of the deal protection devices, the individual defendants have locked up the proposed transaction and have precluded other bidders from making successful competing offers for the company,” the suit in U.S. District Court in Kansas City, Kan., said.

Spokeswomen with each power company said they could not comment on the lawsuit.

Disclosures to Westar shareholders also lacked what the lawsuit said is material information about financial projections under a merger of the two large utility companies. It also cited potential conflicts of interest with financial advisers and investment bankers in the transaction, without citing specific conflicts.

Westar and Great Plains each has scheduled shareholder votes Nov. 21 in their bid to join together as Monarch Energy Holding Inc., which would be based in Kansas City. Great Plains shareholders would receive 0.5981 of a share of Monarch for each of their shares. Westar shareholders would receive one Monarch share for each of their shares.

Shares of Westar were up 30 cents at $50.74 in morning trading Monday. Great Plains shares were up 21 cents at $30.98.

Westar and Great Plains announced their current merger plans in July after Kansas regulators had rejected their original plans. The new proposal treats the transaction as a merger of equals, in contrast to the original deal in which Great Plains planned to buy Westar in a $12.2 billion deal.

Combined, the companies would have about 1.5 million customers and more than 5,000 employees.

Reese’s lawsuit said Westar shareholders should be told more about the financial projections of the merged businesses, including expectations about cost savings, earnings per share and cash flow.

Reese seeks class-action status for the lawsuit.

The lawsuit names as defendants Westar, Great Plains Energy, directors of Westar, including CEO Mark A. Ruelle, and related businesses.

Westar shareholders are scheduled to vote Oct. 25 to elect directors. This month’s vote comes after the traditional meeting in May had been put off pending the expected acquisition by Great Plains.

This story was originally published October 9, 2017 at 10:20 AM with the headline "Westar shareholder sues to block merger with KCP&L parent company."