KANSAS CITY, Mo.—Aquila Inc. shareholders on Tuesday voted in favor of selling the regional utility’s electric operations to competitor Great Plains Energy Inc.
The Kansas City-based company, operator of electric and natural gas utilities in Missouri, Colorado, Iowa, Nebraska and Kansas, said 88 percent of votes cast at a special meeting of shareholders were in favor of the sale, valued at $1.6 billion.
Shareholders will receive about $4.35 in cash and Great Plains stock for each share, based on Great Plains’ closing price Tuesday of $29.84 per share, up 59 cents. Shares of Aquila, which would become a subsidiary of the Kansas City-based company, gained 3 cents to close at $4.11 in trading Tuesday.
“This is not only a positive vote for the future of the company, but when the transaction is complete our shareholders will hold stock in a dividend-paying, investment-grade company,” Richard Green, Aquila’s chairman and chief executive officer, said in a written statement.
The deal still needs approval from four state regulatory agencies. Also, Great Plains shareholders must approve the purchase during a special meeting scheduled for Wednesday. The deal is expected to close in the first quarter.
Once the sale is approved, Aquila plans to then sell the remainder of its gas operations and its Colorado electric operations to Black Hills Corp. of Rapid City, S.D., for about $940 million in cash.
When the transactions were first announced in February, Great Plains said it planned to retain most employees currently working for Aquila’s Missouri-based electric utility, although it acknowledged some job losses were possible. Black Hills said it planned to keep all employees who worked for the operations it was acquiring.
Pirate Capital LLC, a Norwalk, Conn.-based hedge fund that said it owns about 2.6 percent of Aquila shares, initially criticized the sale to Great Plains as shortchanging investors and filed suit in Delaware Chancery Court to stop it. The lawsuit was later dismissed.
Aquila, a one-time high-flying operator with hands in a number of non-utility businesses, collapsed following the demise of Enron Corp., with its stock price going from about $40 a share in 2001 to almost worthless a year later.
The company spent recent years streamlining its operations, reaching a deal in September 2004 to sell off natural gas operations in Michigan, Minnesota and Missouri and its electric operation in Kansas to three other energy companies for $896.7 million. Most of the money went to paying down debt.
Aquila also sold off its interest in various power plants and, in 2006, its majority stake in telecommunications provider Everest Global Technologies Group LLC for $85.7 million.
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