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Great Plains Energy (GXP) to Acquire Westar for $12.2 Billion

Great Plains EnergyInc.GXP announced that it has entered into an agreement to acquire Westar EnergyInc. WR . The transaction has an estimated value of $8.6 billion and is anticipated to close in the spring of 2017, subject to regulatory approvals.

Under the terms of the agreement, Westar's shareholders will receive $60 a share, consisting of $51 in cash and $9 in Great Plains Energy stock. Also, Great Plains Energy will assume Westar's debt of around $3.6 billion. Once the transaction is closed, Westar will become a wholly owned subsidiary of Great Plains Energy.

To finance the deal, Great Plains Energy has secured nearly $8.0 billion of debt. It has also secured a $750 million preferred convertible equity commitment. Apart from that, the company plans to issue long-term financing, consisting of a combination of equity, equity-linked securities and debt, prior to closing of the transaction.

Upon closing of the transaction, Great Plains Energy will be able to cater to more than 1.5 million customers in Kansas and Missouri with a generation capacity of nearly 13,000 megawatts and gain access to around 10,000 miles of transmission lines and over 51,000 miles of distribution lines.

The latest acquisition is expected to be a major consolidation in this sector, resulting in more controlled costs and consumer rates. Great Plains Energy also expects anticipated savings from the deal to help lower future rate increase requests.

Clearly, the addition of Westar's generation fleet will increase the diversity and sustainability of Great Plains Energy's generation portfolio, giving it the capability to meet over 45% of the combined utility's retail customer demand with clean energy.

In a similar move, Dominion Resources Inc. D , a leading producer and transporter of energy, recently entered into a $4.4 billion merger deal with Questar Corporation STR in a bid to expand its geographical presence.

Currently, Great Plains Energy carries a Zacks Rank #3 (Hold).

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DOMINION RES VA (D): Free Stock Analysis Report

WESTAR ENERGY (WR): Free Stock Analysis Report

GREAT PLAINS EN (GXP): Free Stock Analysis Report

QUESTAR (STR): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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