UtiliCorp United and Empire District Electric Co. have announcedthey have signed a definitive agreement to merge the twoMissouri-based companies in a stock and cash transaction valued at$800 million, including the assumption of debt.

Under terms of the agreement, UtiliCorp is offering $29.50 foreach Empire District common share, payable in UtiliCorp commonstock or cash, which $505 million. UtiliCorp also will assumeapproximately $260 million of existing Empire District debt.Existing Empire District preferred stock totaling approximately $33million will be redeemed prior to closing.

The agreement contains a collar under which the value per sharewill decrease if UtiliCorp’s common stock is below $22 per share atclosing and will increase if UtiliCorp’s common stock is above $26per share at closing. Empire District shareholders may elect totake cash or stock. Total cash paid to Empire shareholders will belimited to no more than 50% of the total merger consideration, andthe stock that may be issued in the merger is limited to 19.9% ofthe then outstanding common stock of UtiliCorp.

The agreement has been approved by the boards of directors ofboth companies, and is subject to approvals by Empire Districtshareholders and by state and federal regulatory agencies and othercustomary conditions. UtiliCorp shareholder approval is notrequired. Robert K. Green, UtiliCorp president and chief operatingofficer, termed the merger “a significant step in growingUtiliCorp’s domestic operations,” following UtiliCorp’s $270million merger agreement with Missouri-based St. Joseph Light &Power

The deal represents a premium of 39% to Empire Districtshareholders based on Empire District’s closing share price of$21.25 on May 10, 1999, and an approximate 14% increase in annualdividend based on UtiliCorp’s current dividend rate and currentcommon stock price. Based on Empire’s average share price since thebeginning of 1999, the agreement represents a premium of 28%.

©Copyright 1999 Intelligence Press Inc. All rights reserved. Thepreceding news report may not be republished or redistributed, inwhole or in part, in any form, without prior written consent ofIntelligence Press, Inc.