Great Plains Energy Inc, the owner of regulated power utility Kansas City Power & Light, will buy bigger rival Westar Energy Inc for $8.6 billion, the largest deal in the US electricity distribution market so far this year. Falling demand in both open and regulated power markets due to increased energy efficiency and a weak economy has led to several deals as US utilities look to cut costs and diversify their portfolios.
This year, Dominion Resources Inc said it would buy Questar Corp for about $4.4 billion and Exelon Corp closed its $6.8 billion merger with Pepco Holdings Inc Westar shares rose as much as 8 percent to a record high of $57.24 on Tuesday, but were below the cash-and-stock offer price of $60 per share, suggesting that investors were skeptical the deal would go through. Great Plains stock fell as much as 8 percent to $28.50.
The enterprise value of the deal is about $12.2 billion, including $3.6 billion of Westar's debt. Great Plains said it had secured about $8 billion of committed debt financing from Goldman Sachs and was planning equity and debt issuance to fund part of the deal.
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