Hedge fund Pirate Capital LLC is suing to block Great Plains Energy Inc.'s acquisition of Aquila and its Missouri-based electric utility by Kansas City Power & Light (KCP&L) parent Great Plains Energy Inc. for about $1.7 billion in cash and stock plus assumption of $1 billion of Aquila debt.
Pirate, based in Norwalk, CT, controls 5% of Aquila shares. The fund called the proposed transaction a "sweetheart deal." In its suit, filed Monday in Delaware Chancery Court, Pirate said, "After years of targeted divestitures and Aquila management's own positive assessment of the company's future, the transaction is premature and fails to adequately compensate Aquila shareholders."
Pirate wants the deal blocked, or if it is completed Pirate wants it overturned and to be awarded damages. The hedge fund has been campaigning against the transaction and calls the deal "despicable" (see Daily GPI, Feb. 12). Thomas R. Hudson Jr., portfolio manager of Pirate, wrote to Aquila CEO Richard Green in February to express his opposition.
"As we have previously stated, we are extremely dissatisfied that the deal with Great Plains Energy and Black Hills Corporation was accepted by management, and cannot believe that such despicable terms for ILA [Aquila] shareholders were even entertained," Hudson wrote.
The deal was announced in February along with a proposed transaction by which Black Hills Corp. would acquire Kansas City, MO-based Aquila's gas utilities in Nebraska, Colorado, Iowa and Kansas and its electric utility in southeastern Colorado for $940 million in cash and debt assumption (see Daily GPI, Feb. 8).
Earlier this month, Aquila said it had made the first regulatory filings necessary to complete the transactions (see Daily GPI, April 9). A spokesman for Aquila said the company is standing behind its proposed transactions.
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