KCP&L acquisition to give Missouri another Fortune 500 company
JEFFERSON CITY, Mo. – Today the Missouri Public Service Commission placed on the agenda discussion of the acquisition of Westar by the parent company Kansas City Power & Light. The acquisition would boost KCP&L into the Fortune 500 giving Missouri a much-needed boost in corporate heft with the impending acquisition of Monsanto by the German-based Bayer.
The purchase has been agreed to by the corporate boards. One of the final checkpoints is with government regulators at the Missouri Public Service Commission ,which has been ongoing for several weeks now. However, there is concern that if Missouri regulators drag out a lengthy regulatory approval process it could jeopardize KCP&L’s ability to close the purchase on time.
KCP&L touts the merger as a way to better position the company to serve customers while meeting the region’s energy needs. The merger would create the first Fortune 500 company in Kansas City, Missouri proper. Other Fortune 500 companies in Missouri include Ameren, Express Scripts, Centene, Emerson Electric, Monsanto, Reinsurance Group of America, O’Reilly Automotive, Edward Jones Financial, Graybar Electric, and Peabody Energy.
It’s viewed by many that with 90 days until the General Assembly convenes there could be a legislative reaction if regulatory delays sink the chances of Missouri having another Fortune 500 company, especially coming off a campaign year with both parties’ nominees for governor being particularly critical of what they have defined as job killing regulations.
Sen. Ron Richard, President of the Senate, and Senate Majority Floor Leader Mike Kehoe have specifically made their support of the purchase known to state regulators.
“I support this acquisition because it paves the way for future economic development, investment and continued prosperity for the State of Missouri,” Kehoe, R-Jefferson City, said in addressing the commission.
The merger would not only expand the customer base, but the infrastructure of KCP&L to include over 10,000 miles of transmission lines and 51,000 miles of distribution lines. If the purchase is successful it will result in over 45 percent of the combined customer demand will be able to be met with emission-free energy.
“Westar and KCP&L are trusted neighbors and have worked together for generations in Kansas. The combination of our two companies is the best fit for meeting our region’s energy needs,” said Terry Bassham, chairman and chief executive officer of Great Plains Energy and KCP&L. “This is an important transaction for Kansas and our entire region. By combining our two companies, we are keeping ownership local and management responsive to regulators, customers, and regional needs, while enhancing our ability to build long-term value for shareholders.”
The merger has also been praised by regional business leaders.
“Both KCP&L and Westar are leaders of the broader regional community,” wrote Joe Reardon, president and CEO of the Kansas City Chamber of Commerce in a letter to PSC commissioners. “They are dedicated to advancing the growth of our region’s businesses and economy. They advocate on behalf of our regional community both locally and globally. …I have been witness to this engagement in my role at the Chamber and am encouraged by the positive opportunity this combination will provide to the Kansas City region.”
Additionally, the companies identified strengths the merger would bring to the area from a business standpoint, including cost savings and efficiencies, lowered operating costs, and increased shareholder and synergy savings. “KCP&L and Westar’s innovations and leadership have fostered a climate in our region that attracts businesses and skilled individuals,” wrote Reardon. “The merger will improve our competitive advantage, creating opportunities and savings throughout our area.”
“KCP&L and Westar’s innovations and leadership have fostered a climate in our region that attracts businesses and skilled individuals,” wrote Reardon. “The merger will improve our competitive advantage, creating opportunities and savings throughout our area.”
Once closed, Great Plains will wholly own Westar. Westar is currently Kansas’ largest utility.
“This is an important day for Westar, our customers, employees, shareholders, the communities we support and for the state of Kansas,” said Mark Ruelle, president and chief executive officer of Westar. “Our commitment to reliability, customer satisfaction, safety, and sustainability is consistent with Great Plains Energy’s values, which makes them our ideal partner. We’re eager to join the Great Plains Energy team and excited about this new chapter that combines the unique strengths of our respective organizations to form an even stronger company for our state.”
In 2008, Great Plains Energy, the parent company of KCP&L purchased Aquila, an electric utility serving customers in adjacent areas of Missouri. That acquisition has which was successfully reviewed and approved by both the Missouri Public Service Commission and the Kansas Corporation Commission has been favorably reviewed.
“The utility industry is facing rising customer expectations, increasing environmental standards and emerging cyber security threats. These factors, coupled with slower demand growth for electricity, are driving our costs and customer rates higher. Our acquisition of Westar will create operational efficiencies and future cost savings that will benefit all involved – customers, shareholders, employees and the communities we serve. These savings also will help reduce future rate increase requests,” said Bassham. “Combining our two companies will result in cost savings and operational benefits for our more than 900,000 Kansas and 600,000 Missouri customers.”
Currently, Great Plains Energy and Westar jointly own and operate the Wolf Creek Nuclear Generating Station, as well as the La Cygne and Jeffrey power plants. The addition of Westar’s generation capacity will help KCP&L navigate increasingly stringent EPA environmental regulations which many have been responsible for increasing electric rates nationwide. Among investor-owned utilities in the United States, the combined company will have one of the largest portfolios of wind generation in the country.
Last week, Great Plains shareholders approved the merger with Westar, putting the acquisition one step closer to the projected spring 2017 close. With Westar, Great Plains is expected to gain $8.6 million in total stock and cash consideration. After the merger, the company will serve more than 1.5 million customers in Missouri and Kansas.