The Merge Surge Continues: UtiliCorp Buys St. Joseph L&P
UtiliCorp joined the merger-mania Friday as it announced plans to acquire
St. Joseph Light &Power in Missouri for $190.6 million. The agreement
has been approved by the boards of directors for both companies but still
needs approval from Light &Power shareholders and state and regulatory
officials. Both companies expect the deal to close in 2000.
Under the terms in the agreement, UtiliCorp will pay Light &Power
shareholders $23 per share for their common stock, which will then be converted
into UtiliCorp stock when the deal closes. The stock conversion represents
a premium of 36% based on Light &Power's closing price of $16.88 on
March 4. Light &Power will operate as a unit of UtiliCorp.
"The merger strengthens our competitive position in our home state
and in the Midwest," said Richard Green, CEO of UtiliCorp. Light &Power
serves 6,300 gas customers and 61,500 electric customers in 10 counties
in northwest Missouri. UtiliCorp's Missouri Public Service serves 193,000
electric customers and 44,700 gas customers in the western half of the
state. A spokesman for the Public Service Commission of Missouri said a
combined UtiliCorp-Light and Power company would be the state's fourth
largest gas distributor and third largest electricity distributor.
"Not only is UtiliCorp a neighbor, serving communities east and
south of Light &Power's service area, but it is a consistent industry
leader in both energy marketing and distribution as well as a strong advocate
for customer choice," said Terry Steibecker, Light &Power's CEO.
This merger marks the second shake-up in Midwest energy markets in two
weeks. In late February, Southern Union offered to merge with Southwest
Gas, outbidding Oneok, which had a previous agreement to merge with Southwest,
by $100 million (See NGI, March 1 issue).
"Light &Power put themselves up for bid last year, and we started
serious negotiations with them in December," said Jerry Cosley, a
While it appears UtiliCorp is simply running with the general industry
merger trend, Cosley said the company's activity is different. "We
have been doing this for the past decade, whereas those companies are doing
it now to protect against low prices. Our main reason is to strike some
balance in our acquisition plan. Most of our moves lately have been overseas,
and, by acquiring Light &Power, we can balance out our asset sheet.
The safe bet is on UtiliCorp continuing to acquire well-run distribution
companies." Domestically, UtiliCorp has gas operations in Minnesota,
Michigan, Iowa, and Nebraska, as well as gas and electric operations in
West Virginia, Missouri, Kansas, and Colorado.
Upon approval, UtiliCorp does expect to make decisions to cut overlap,
improve cost savings, and maximize efficiencies, but Cosley said it is
too early to put a finite number on how many jobs will be lost.