Great Plains Energy, the parent company of Kansas City Power & Light, said it would buy rival Westar Energy for $8.6 billion in cash and stock.
Westar shareholders will receive a total of $60 per share, representing a premium of 13.4 percent to the stock's Friday close.
The deal comes at a time when U.S. utilities are struggling with falling demand for electricity in both open and regulated markets due to increased energy efficiency and a weak economy.
The enterprise value of the deal is about $12.2 billion, including about $3.6 billion in Westar's debt, the companies said on Tuesday.
The transaction will increase Great Plains Energy's customer base to more than 1.5 million in Kansas and Missouri, with nearly 13,000 megawatts of generation capacity.
Great Plains Energy has secured about $8 billion of committed debt financing from Goldman Sachs.
Goldman Sachs & Co. is Great Plains Energy's financial adviser for the deal and Bracewell LLP is its legal adviser.
Guggenheim Securities LLC is Westar's financial adviser and Baker Botts LLP is its legal counsel.
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