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KCP&L, UtiliCorp Fight Hostile Takeover

Fortnightly Magazine - August 1996

Kansas City Power & Light Co. (KCPL) and UtiliCorp United Inc. (UU), which announced plans to merge on January 22, have amended their merger agreement in response to a hostile takeover attempt by Western Resources, Inc. The revised terms create a new KCPL subsidiary, which would be merged into UU. The resulting company would then be merged with KCPL to form the combined company. UU shareholders would receive one share in the merged company for each UU share held. KCPL shareholders would continue to hold their existing KCPL shares. [The first merger proposal gave KCPL shareholders one share of new stock for each KCPL share, while UU shareholders received 1.096 new shares for each UU share.]

Western Resources (WR) maintains that its original offer is still "financially superior" for KCPL shareholders. WR also added: "It appears to us that the shift in value from UtiliCorp to KCPL shareholders was forced by the failure of KCPL management to obtain adequate shareholder support for the merger it proposed in January."

Meanwhile, on May 22, WR filed testimony with the Kansas State Corporation Commission in its pending rate proposal, supporting its plan to lower electric rates by about $92 million over seven years. In August 1995, WR had proposed accelerating depreciation on its Wolf Creek nuclear plant, while implementing a $61-million electric rate decrease for Kansas Gas and Electric (KGE) customers. WR says its merger proposal would cut annual electric rates by $21 million for KCPL customers, and by another $10 million annually for KGE customers.


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