KANSAS CITY, Mo. _ Great Plains Energy Inc. announced Monday it has struck a new merger deal with Kansas' largest electric utility aimed at resolving objections that killed their previous deal.
The Kansas City-based parent of Kansas City Power & Light would merge with Topeka-based Westar Energy Inc., which serves 1 million customers in Kansas.
"We are pleased to announce a revised agreement with Westar Energy that we believe directly addresses regulatory concerns with our originally proposed transaction, while increasing the long-term value and upside opportunity for our shareholders, customers, communities and employees," said Great Plains CEO Terry Bassham, who would be CEO of the combined businesses.
The deal, valued at $14 billion, would involve forming a new company to hold all of the current pair's operations. It would take on a new name. It would not spend any cash or take on any debt to accomplish the deal.
The new company also would be more than half owned by the current shareholders of Westar, according to Monday's announcement.
Last year, Great Plains and Westar announced a $12.2 billion plan to merge that involved Great Plains assuming $3.6 billion in Westar debt.
The deal was turned down in April after the board of the Kansas Corporation Commission sided with its staff and several other objectors, finding that Great Plains would take on too much debt and the deal would cost too many jobs.
Both utilities have maintained that, rather than running the risk of being acquired by an out-of-town party, they're better off as one company with local employees and executive staffs.
Monday's announcement said no layoffs would occur as a result of the merger and that the newly formed company would keep at least 500 jobs in Westar's Topeka headquarters for at least five years.
Combined, the companies have about 5,120 employees, including about 2,900 represented by unions.
Kansas City would be the new company's headquarters, but both Kansas City and Topeka would "have the kind of jobs you would expect to find in a headquarters" after the merger, Bassham told investors during a conference call Monday.
That is because each will serve as an operations headquarters after the merger.
Customers would share $50 million in credits that the companies plan to offer even before they've been able to take advantage of expected cost savings from the merger.
Bassham said cost savings would be substantial enough to cover not only the $50 million in credits but also help avoid future rate increases after the merger.
The news pushed shares of Great Plains Energy 82 cents higher to $30.07, a 2.8 percent gain, in morning trading. Investors punished shares of Westar, cutting their price by $2.24, or 4.2 percent, to $50.89, with the elimination of hopes for a premium buyout offer.
