Friday, May 5, 2017

$380 Million Breakup Fee Is Year's Earnings At Westar Energy

Great Plains Energy (GXP) will have to pay $380 million break up fee to Westar Energy (WR) if it fails to consummate an acquisition of Westar.

“In the event we would need to pay a termination fee, the applicable fee would be $380 million,” said Lori Wright, of Great Plains Energy.

The $380 million fee would be slightly more than what Westar Energy earns in a year. The company earned  $347 million, or $2.43 per share, for 2016 compared with earnings of $292 million, or $2.11 per share, for 2015.

Great Plains Energy and Westar Energy recently filed a petition with the Kansas Corporation Commission requesting more time to consider a merger.

On April 19, 2017, The KCC denied approval of Great Plains Energy’s acquisition of Westar. 


The new petition for reconsideration requests additional time until May 31, 2017, to allow further discussions between Great Plains Energy and Westar to determine if a mutually agreeable revised transaction might be negotiated that resolves the concerns identified by the KCC, while preserving meaningful benefits for customers and shareholders.

If you read the original order denying the sale of Westar Energy, you get the idea that the Kansas Corporation Commission left no room for negotiation. It appears the KCC hates the deal, period.

Great Plains is trying to salvage the situation. The company does not want to pay a $380 million breakup fee. 

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