(RTTNews.com) – Westar Energy, Inc. ( WR ) and Great Plains Energy Inc. ( GXP ) Monday announced that their boards of directors have unanimously approved a revised transaction for a stock-for-stock merger of equals, creating a company with a combined equity value of approximately $14 billion. The deal involves no premium paid or received with respect to either company, no transaction debt and no exchange of cash.
The name of the new company is not revealed. The combined company will provide electric utility service to approximately one million Kansas customers and nearly 600,000 customers in Missouri.
Mark Ruelle, president and chief executive officer of Westar Energy said, “We are confident we have addressed the regulatory concerns with our originally-proposed transaction. We appreciate the Commission welcoming a different way to combine these two companies, preserving the unique value available only through this particular business combination.”
Westar Energy and Great Plains Energy will merge to form a new holding company, which will operate regulated electric utilities in Kansas and Missouri. Operating headquarters will be in both Topeka, Kansas, and Kansas City, Missouri. Corporate headquarters will be in Kansas City, Missouri.
As per the agreement, Westar Energy shareholders will exchange each share of Westar Energy common stock for a share in the new holding company. Great Plains Energy shareholders will receive .5981 shares of common stock in the new holding company for each Great Plains Energy share. The transaction has a total equity value of approximately $14 billion.
Following completion of the merger, Westar Energy shareholders will own approximately 52.5 percent and Great Plains Energy shareholders will own approximately 47.5 percent of the combined company. The agreement provides that, upon closing, the new holding company expects to set its initial common dividend at a level which maintains the current dividend for Great Plains Energy shareholders. This will result in approximately a 15 percent dividend increase for Westar Energy shareholders.
The board of directors will consist of an equal number of directors nominated from each company, including Bassham from the Great Plains Energy board and Ruelle from the Westar Energy board. The lead independent director will be Charles Chandler, IV, currently Westar Energy’s independent chairman of the board.
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