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Western reconsidering deal?
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November 11, 1997: 10:24 a.m. ET
Reports say company may want to alter $2B deal with Kansas City Power
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NEW YORK (CNNfn) - After waging a successful takeover battle nine months ago for Kansas City Power & Light, Western Resources Inc. is reportedly reconsidering the deal.
The Wall Street Journal reported Tuesday that Western's executives want to renegotiate the deal, which still hasn't closed, and have been pressuring management to call off the acquisition.
Insiders say KCPL isn't as attractive to Western now that it has diversified and is no longer just a utility company. They also say Western now fears it paid too much.
Western Chairman and Chief Executive Officer John Hayes Jr. Denied he is considering calling off the deal. KCPL also insisted the deal was on schedule.
As an expression of their unhappiness over the deal, Western executives reportedly spread the word at a recent trade show that the deal might be nixed if regulators demanded electricity rate cuts that would lower profits.
They also say Western has yet to schedule a shareholder vote on the deal, a sign, they say, that the company has intentionally dragged out the deal. Hayes said the company felt no need to rush a vote.
Speculation that the deal might be renegotiated comes as Salomon Brothers Inc., the company's financial adviser, is expected to give a fairness opinion that's not as optimistic as originally predicted. And recently, Oppenheimer & Co. and Donaldson Lufkin & Jenrette both issued reports that said Western is severely diluting its market value by going ahead with the deal.
Western's recent acquisitions of security company Protection One Inc. and the natural gas operations of Oneok Inc. have boosted Western's shares 17 percent since it bid for KCPL. KCPL's stock, however, has remained at about the same level.
Western first bid for KCPL in the summer of 1996 after it and UtiliCorp United Inc. had agreed to merge. Following several months of bidding, KCPL agreed to Western's buyout offer of about $2 billion.
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Western Resources
KCPL
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