UTILICORP AND KCPL ANNOUNCE DEFINITIVE MERGER AGREEMENT;
COMPANIES' COMBINED ASSETS TOTAL $6.4 BILLION
KANSAS CITY, MO, January 22, 1996 -- Kansas City Power & Light Company
(NYSE:KLT) and UtiliCorp United (NYSE: UCU) announced today that they have
signed a definitive agreement to merge the two companies into a new corporation
in a stock transaction valued at approximately $3 billion. The merger of equals
will create a diversified energy company with total assets of approximately $6.4
billion and about 2.2 million customers in domestic and international markets.
The transaction has been unanimously (with one KCPL director absent)
approved by the boards of directors of both UtiliCorp and KCPL. The agreement
calls for shareholders of KCPL to receive one share of stock in the new company
for each share of KCPL common stock owned. Holders of UtiliCorp common stock
will receive 1.096 shares of stock in the new company for each common share of
UtiliCorp owned. At January 19, 1996 there were approximately 62 million shares
of KCPL common stock outstanding and approximately 46 million shares of
UtiliCorp common stock outstanding. The merger is expected to be tax-free for
both UtiliCorp and KCPL shareholders.
The chief executive of the two Kansas City-based firms said the merger is
expected to benefit the public as it reflects the new competitive dynamics of
the utility industry with the creation of a unique type of company -- one with
the customer focus and growth characteristics of a diversified energy services
provider, underpinned by the operating and financial strengths of its core
utility business.
The executives said that over the next 10 years they expect the merger to
produce substantial efficiencies through such actions as combining utility
operations and business processes, sharing facilities, eliminating duplicate
systems, avoiding capital outlays and combining the workforces.
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"We are partnering with a company that has demonstrated marketing and
entrepreneurial skills that are rare for this industry," said KCPL Chairman and
Chief Executive Officer Drue Jennings. "Combined with our low cost
characteristics, these strengths should enable us to succeed in a competitive
and deregulated market environment. UtiliCorp's success at identifying and
serving new segments of the energy market -- worldwide -- made this merger
especially attractive," he said. Jennings noted that the merger accelerates the
process begun two years ago to enter unregulated markets with the creation of
the company's KLT Inc. subsidiary.
"This is a combination of two companies with highly complementary
strengths," said UtiliCorp Chairman and Chief Executive Officer Richard C.
Green, Jr. "KCPL is widely recognized for its financial strength and operational
excellence, as well as its vibrant and growing urban service territory. The new
company will combine the best of two worlds -- a strong, conservatively managed
financial position, coupled with an aggressive strategy and potential for
domestic and international growth," he added.
Upon completion of the transaction, Jennings will become chairman of the new
company, and Green will become vice chairman and chief executive officer.
Green's brother, Robert K. Green will be president of the new company and Marcus
Jackson will serve as executive vice president and chief operating officer.
Robert K. Green is currently executive vice president of UtiliCorp and Jackson
is senior vice president and chief operating officer of KCPL.
The new board will have 18 members, comprised of the current directors of
both companies. Each company currently has nine directors.
Each company will continue its current dividend policy until completion of
the merger. Subsequent dividend policy will be developed by the board of
directors of the new company. Both companies have historically increased their
dividends consistently
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and anticipate that such policies will continue, both before and after the
merger, subject to earnings performance and regulatory constraints.
"Everyone should gain from this combination," said Jennings. "We expect
shareholders to receive the benefits of owning a new company with accelerated
growth prospects. Customers have the opportunity to take advantage of an
expanding array of energy-related products and services. Employees will be part
of an enterprise with an enhanced ability to compete effectively on a larger and
more competitive playing field," he noted.
"The bottom line of our agreement," said Richard C. Green, Jr., "is that
together we expect to be a far more effective domestic and global competitor.
The strengths and synergies add up. Our companies combine expertise in the
generation and delivery of electricity with leadership in marketing natural gas.
We both are involved in developing new technologies. KCPL's China initiative
fits well with our presence in the Pacific Rim and elsewhere. And most
importantly, we have demonstrated that our employee teams share a work ethic and
dedication to excellence that ensures our future success."
The merger is subject to approval by the shareholders of both companies and
by various regulatory authorities, including utility regulatory commissions of
seven states and the Canadian province of British Columbia, the Federal Energy
Regulatory Commission and the Nuclear Regulatory Commission. The transaction is
expected to be completed in 12 to 18 months.
The combined company will have various energy operations across the U.S. and
in Canada, the United Kingdom, New Zealand, Australia, China and Jamaica.
Generating facilities owned by UtiliCorp and KCPL are among the lowest cost
power producers in the Midwest. Together they own utility generating facilities
with approximately 4,881 megawatts of aggregate generating capacity. Both
Utilicorp and KCPL have previously established policies of granting third party
power providers access to electric transmission
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facilities for wholesale wheeling and other bulk power transactions. The
companies plan to make regulatory filings to ensure that this open access
continues after the merger is completed.
For the first nine months of 1995, KCPL reported revenues of $681.9 million,
net income of $99.2 million and earnings per common share of $1.55. During the
same period, UtiliCorp reported revenues of $1.13 billion, net income of $56.4
million and primary earnings per share of $1.22.
In 1994, KCPL reported revenues of $868.3 million, net income of $104.8
million and earnings per common share of $1.64. UtiliCorp in 1994 reported
revenues of $1.5 billion, net income of $94.4 million and primary earnings per
share of $2.08.
Kansas City Power & Light Company provides electric power to a growing and
diversified service territory encompassing metropolitan Kansas City and parts of
eastern Kansas and Western Missouri. KCPL is a low-cost producer and a leader in
fuel procurement and plant technology. KLT Inc., a wholly-owned subsidiary of
KCPL, pursues opportunities in non-regulated, primarily energy-related ventures.
UtiliCorp United is an international electric and gas company with energy
customers and operations across the U.S. and in Canada, Great Britain, New
Zealand, Australia and Jamaica. In 1995 it launched EnergyOne-SM-, the first
nationally branded line of products and services for electric and gas utility
customers. UtiliCorp has grown rapidly over the past decade through utility
mergers and acquisitions and by starting non-regulated energy-related
businesses.
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MEDIA CONTACTS: INVESTOR CONTACTS:
-------------------------------------- --------------------------------------
KCPL: Phyllis Desbien--816-556-2903 David Myers--816-556-2718
Pam Levetzow--816-556-2926 Andrea Bielsker--816-556-2595
UtiliCorp: Jerry Cosley--816-467-3677 Dale Wolf--816-467-3536
Media Relations--816-467-3000 Ellen Fairchild--816-467-3506