Report: Ameren to make final offer to acquire Westar

Dive Brief:

  • Ameren Corp. is gearing up to make a final offer for Kansas-based utility Westar Energy, sources with knowledge of the matter told Bloomberg. 
  • Westar, which has a market value of $7.4 billion, set a deadline for potential suitors to submit bids by May 23. Sources told Bloomberg that the decision to sell could come by the end of the month, but no agreement has yet been finalized. 
  • The Kansas utility could still turn down all bids and remain independent. Speculation over a potential sale began last year, when Westar President and CEO Mark Ruelle said the utility would consider the option.  

Dive Insight:

There's been a flurry of power sector mergers and acquisitions in the first quarter of 2016, with 22 deals valued at more than $50 million announced so far, totaling $11.4 billion in value. 

Westar may soon be the latest utility to get snapped up in the sector, with a number of deals announced in the past year: Fortis announced it is purchasing ITC Holdings; Algonquin Power & Utilities Corp. said it is purchasing Empire District Electric Co.; and Emera announced a bid to acquire TECO Energy.

All three are Canadian companies. Analysts at UBS Securities told Bloomberg that Canadian power players are drawn to the U.S. market due to high demand growth in certain regions and the financially viable regulatory model for U.S. utility companies.

But the biggest driver of power sector M&A may be the broad trend of change sweeping throughout the industry today, according to a recent report by PwC

"The U.S. is ripe for opportunity, given the massive changes we're seeing in the country,” PwC's Jeremy Fago, who leads the firm's power and utilities deals segment, told Utility Dive. “Changes are happening and the opportunities are on the back end, to  deploy capital to really meet the infrastructure changeovers that are necessary in this country.”

Kansas utility Great Plains Energy Inc. has also expressed interest in Westar, but Bloomberg reports it's still unclear if the utility will make a move to buy Westar. Spokeswomen for Westar and Great Plains declined to comment to Bloomberg while an Ameren representative also would not comment.

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