Dive Brief:
- The Federal Energy Regulatory Commission has approved the merger of Great Plains Energy and Westar Energy, moving the $14 billion deal a step closer to fruition.
- Regulators in Kansas are expected to make a decision this summer. The Kansas Corporation Commission rejected the deal a first time around, but staff has recommended the amended merger be approved.
- The companies say the merger is on track to close in the second quarter of this year. The combined company would have 1 million customers in Kansas and nearly 600,000 customers in Missouri.
Dive Insight:
A decision is expected in June by Kansas regulators, who previously rejected the deal. Chief among their concerns was weather or not the acquisition premium was too high. The companies revised the bid to address that concern. The revised agreement involved no transaction debt, no exchange of cash, and "is a stock-for-stock merger of equals, creating a company with a combined equity value of approximately $15 billion," Great Plains said in a November statement when shareholders approved the deal.
FERC approved the deal in February. According to the commission, if the companies try to recover transaction-related costs through their transmission, wholesale distribution, or wholesale power rates, they will need to make new filings under Section 203 and 205 of the Federal Power Act.
They would need to "specifically identify the transaction-related costs they are seeking to recover," according to FERC's order, and "demonstrate that those costs are exceeded by the savings produced by the Proposed Transaction."
If the merger is completed, Westar shareholders would own approximately 52.5% and Great Plains shareholders approximately 47.5% of the new company. The companies say the combined entity will have a strong balance sheet and improved free cash flows.
