Dive Brief:
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A settlement between eight bidders, Westar Energy and Great Plains Energy who filed lawsuits against the proposed merger has resolved legal issues related to Great Plains Energy’s $12 billion bid to acquire Westar Energy, but opened the possibility that new bids could emerge, the Topeka Capital-Journal reports.
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The settlement removed provisions in the original bidding process that barred potential bidders from entering a higher bids.
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As many as eight bidders emerged to bid for Westar, and some bidders, in a class action suit, sought to have the bid restrictions removed. The lawsuits were filed in July as plaintiffs alleged Westar executives deliberately undervalued the company when selling it to Great Plains, the news outlet noted.
Dive Insight:
Merger and acquisition activity among utilities has become common as consolidation grows in the industry, but bidding wars for utilities are not very common.
But Great Plains’ bid for Westar has attracted quite a lot of interest. Another utility expressed an interest, followed by interest from a non-utility company and then an infrastructure fund, according to an analyst report. In all, 16 firms expressed an interest in acquiring Westar, and about half moved forward with confidentiality agreements.
However, unique provisions in the original agreement barred their full participation. With those issues resolved by a local court in favor of the bidders, the possibility of a bidding war arises.
But Andy Pusateri, a utilities analyst for Edward Jones, told the Topeka Capital-Journal that it is unlikely the removal of those prohibitions will result in new offers that could start a bidding war for Westar. Great Plains offered a “pretty significant premium” for Westar, he said.