Missouri-based Great Plains Energy Inc. on Tuesday said it agreed to buy Kansas' Westar Energy Inc. for roughly $8.6 billion, a major consolidation in the utilities sector that the companies hope will lead to more controlled costs and consumer rates.

Westar holders will receive $60 a share—$51 in cash and $9 in Great Plains stock—a 13% premium to Westar's closing price of $52.92 on Friday. The transaction has a total value of about $12.2 billion including Westar's roughly $3.6 billion of debt.

The companies anticipate the transaction, which requires regulatory approval and a shareholder vote, closing in the spring of 2017.

"The utility industry is facing rising customer expectations, increasing environmental standards and emerging cybersecurity threats," said Terry Bassham, chairman and chief executive of Great Plains. "These factors, coupled with slower demand growth for electricity, are driving our costs and customer rates higher."

Mr. Bassham added that the anticipated savings from the deal would help reduce future rate increase requests. Upon completion of the transaction, Great Plains will have more than 1.5 million customers in Kansas and Missouri.

Mr. Bassham will be chairman and CEO of the combined company. Mark Ruelle, chief executive of Westar, will remain in his current role until the closing of the transaction. Great Plains will add one Westar director to its board.

Write to Joshua Jamerson at joshua.jamerson@wsj.com

 

(END) Dow Jones Newswires

May 31, 2016 07:15 ET (11:15 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.
Evergy (NYSE:EVRG)
Historical Stock Chart
From Feb 2024 to Mar 2024 Click Here for more Evergy Charts.
Evergy (NYSE:EVRG)
Historical Stock Chart
From Mar 2023 to Mar 2024 Click Here for more Evergy Charts.