Great Plains Reaches Missouri Deal on $8.6 Billion Takeoverby
State utility commission staff strikes deal with power company
Staff says in filing that agreement will protect customers
Great Plains Energy Inc. struck a deal with the staff of Missouri’s utility regulators over its $8.6 billion takeover of rival Westar Energy Inc., a move that may bring the companies closer to completing their merger.
The agreement between Kansas City, Missouri-based Great Plains Energy and the staff of the Missouri Public Service Commission would require the company to keep its capital structure and credit ratings separate from Topeka, Kansas-based Westar’s, the agency’s staff said in a filing Wednesday. It also bars Great Plains from seeking an increase in capital costs or in retail rates as a result of its Westar purchase.
The pact marks a turnaround for the commission’s staff, which less than three months ago described the Westar deal as “detrimental to the public interest” and said it should require approval from the state board as a condition to the merger’s closing. An agreement may shorten a state review that could otherwise threaten to hold up a transaction that Westar and Great Plains have been expecting to close by next year.
The staff said in its filing that the agreement with Great Plains includes “important protections and safeguards for Missouri ratepayers and avoids the uncertainty and expense of protracted litigation.” It still requires the approval of the actual utility commission.
Westar rose as much as 1.1 percent to $57.10 in New York on Thursday, the biggest intraday gain in more than a month. Great Plains was up as much as 2.2 percent at $27.55.
The Great Plains-Westar deal was announced in May as utilities grappled with rising capital costs and weak demand. It may end up being one of the sector’s richest in recent history based on the premium paid, according to SunTrust Robinson Humphrey Inc. and Evercore ISI. Great Plains stands to almost double its electricity customers with the deal.
Great Plains spokesman Chuck Caisley said by phone that the utility reached “a constructive agreement” with Missouri’s staff that would allow the company to move forward with “a greater degree of certainty.” Westar deferred comment to Great Plains.