US power companies Great Plains, Westar in $8.6 bn merger

US electricity utilities Great Plains Energy and Westar Energy announced Tuesday they would merge in an $8.6 billion deal aimed at building operational efficiencies.

Great Plains will assume control of Westar to create a single company with 1.5 million customers in the Midwest states of Kansas and Missouri and 13,000 megawatts of generation capacity.

The capacity includes the Wolf Creek nuclear plant which the two companies currently jointly own and operate, and two other conventional power plants as well as wind energy.

Great Plains owns Kansas City Power & Light Co., its main operating company.

"The utility industry is facing rising customer expectations, increasing environmental standards and emerging cyber security threats," said Great Plains chairman and chief executive Terry Bassham in a statement.

"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."

Great Plains will pay Westar shareholders $60 in cash and shares, though the final price depends on Great Plains's share price at the time the deal closes.

The total enterprise value in the deal, including debt, is about $12.2 billion, the companies said.

Westar shares added 6.4 percent to $56.30 in opening trade Tuesday, while Great Plains shares fell 7.7 percent to $28.61.