Great Plains Energy-Westar Merger Gets Nod From Shareholders (revised)

Shareholders of Great Plains Energy Incorporated (GXP) and Westar Energy, Inc. (WR) have approved the pending merger related proposals, thereby paving the way for the completion of the transaction in the spring of 2017.

The merger, reportedly valued at $12.2 billion, includes about $8.6 billion in total stock and cash consideration and $3.6 billion of Westar Energy’s debt.

Post the merger, the combined company will serve more than 1.5 million customers across the Kansas and Missouri.

Flashback

Per the agreement, Westar Energy’s shareholders would receive $60 a share, consisting of $51 in cash and $9 in Great Plains Energy stock.

The acquisition will increase Great Plains Energy’s generation capacity by nearly 13,000 megawatts, and give access to around 10,000 miles of transmission lines and over 51,000 miles of distribution lines.

Pending Approvals

The merger is still subject to an approval from a number of regulatory commissions.

These include the State Corporation Commission of the State of Kansas (KCC), the Federal Energy Regulatory Commission (FERC), the Nuclear Regulatory Commission (NRC) and Securities and Exchange Commission (SEC).

Benefits of the Merger

Great Plains Energy and Westar Energy have been competitors for decades. Moreover, both the companies operate in Kansas. A merger will allow them to reduce rate increases for customers and help in lowering costs.

The acquisition is expected to expand Kansas City Power & Light’s geographical footprint through an extended rate base. It will also make Westar Energy a wholly owned subsidiary of Great Plains Energy, and the merged company will be able to meet 45% of customer requirement through clean energy.

The deal will also boost Great Plains Energy’s generation portfolio in terms of diversity and sustainability.

Another Recent Merger

Dominion Resources Inc (NYSE:D). (D) and Questar Corp (STR) have recently completed their merger, creating one of the biggest combined energy and natural gas companies in the U.S. The combined company will be called "Dominion Questar".

Questar will operate as a wholly owned subsidiary of Dominion Resources. Dominion Questar will cater to about 2.5 million electric utility customers and 2.3 million gas utility customers across seven states. It will also provide over 1 trillion cubic feet of natural gas storage.

Zacks Rank

Both Great Plains Energy and Westar Energy carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

(We are reissuing this article to correct a mistake. The original article, issued earlier today, September 29, 2016, should no longer be relied upon.)

DOMINION RES VA (D): Free Stock Analysis Report

WESTAR ENERGY (WR): Free Stock Analysis Report

GREAT PLAINS EN (GXP): Free Stock Analysis Report

Original post

Zacks Investment Research