Great Plains Energy Inc (NYSE:GXP) has agreed to acquire Westar Energy Inc (NYSE:WR), Kansas' biggest electric utility, in a USD-12.2-billion (EUR 10.9bn) deal that it said will make its generation portfolio more diverse and sustainable.
The combined company will have one of the largest wind portfolios among investor-owned utilities in the US, the two said last week.
Kansas City, Missouri-based Great Plains is the parent of utility KCP&L. Following completion of the deal, expected in the spring of 2017, it will have more than 1.5 million customers in Kansas and Missouri and almost 13 GW of capacity. The combined utility will also be able to meet more than 45% of its retail customer demand with emission-free energy.
A more sustainable portfolio will give Great Plains greater flexibility to mitigate potential customer impacts from future carbon regulation, it says.
Westar has been active adding wind to its portfolio. It has a total of 7.2 GW of generation capacity fueled by wind, coal, uranium, natural gas and landfill gas.
"The utility industry is facing rising customer expectations, increasing environmental standards and emerging cyber security threats," Terry Bassham, chairman and chief executive officer of Great Plains and KCP&L said, adding that these factors along with slower demand growth were pushing up costs. The acquisition of Westar would create operational efficiencies and cost savings that would help reduce future rate increase requests, he said.
The price tag includes a USD-8.6-billion cash-and-stock payment to Westar's shareholders and the assumption of USD 3.6 billion in debt.