Great Plains Energy, the parent of regulated power utility Kansas City Power & Light (KCP&L), has signed an agreement to acquire US-based electric utility Westar for $12.2bn including debt.
Under the terms of the deal, shareholders of Westar will receive $60 per share including $51 in cash and $9 in Great Plains Energy common stock.
Great Plains Energy and KCP&L CEO and chairman Terry Bassham said: "The combination of our two companies is the best fit for meeting our region’s energy needs.
"By combining our two companies, we are keeping ownership local and management responsive to regulators, customers and regional needs, while enhancing our ability to build long-term value for shareholders."
Upon completion of the deal, Westar will become a wholly owned subsidiary of Great Plains Energy, which will have nearly 13,000MW of generation capacity, about 10,000 miles of transmission lines and more than 51,000 miles of distribution lines.
In addition to having more than 1.5 million customers in Kansas and Missouri, the combined company will have one of the largest US wind generation portfolios.
Great Plains Energy currently owns and operates the Wolf Creek Nuclear Generating Station, as well as the La Cygne and Jeffrey power plants, in partnership with Westar.
Bassham added: "The utility industry is facing rising customer expectations, increasing environmental standards and emerging cyber security threats. These factors, coupled with slower demand growth for electricity, are driving our costs and customer rates higher."
Great Plains Energy expects the acquisition to create operational efficiencies and future cost savings, which will help reduce future rate increase requests. It will also diversify generation portfolio.
Subject to approvals from the Federal Energy Regulatory Commission and the Nuclear Regulatory Commission among others, the transaction is scheduled to be completed in the spring of 2017.
Image: Upon acquiring Westar, Great Plains Energy will have about 10,000 miles of transmission lines. Photo courtesy ofdan/FreeDigitalPhotos.net.