UPDATE 5-US regulated power firm Great Plains to buy Westar for $8.6 bln

Tue May 31, 2016 1:57pm EDT
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* Great Plains offers $60/shr in cash and stock

* Enterprise value of deal is about $12.2 bln

* Deal includes $3.6 bln of Westar debt (Adds details from conference call)

By Amrutha Gayathri

May 31 (Reuters) - Great Plains Energy Inc, the owner of regulated power utility Kansas City Power & Light, will buy bigger rival Westar Energy Inc for $8.6 billion, the largest deal in the U.S. electricity distribution market so far this year.

Falling demand in both open and regulated power markets due to increased energy efficiency and a weak economy has led to several deals as U.S. utilities look to cut costs and diversify their portfolios.

This year, Dominion Resources Inc said it would buy Questar Corp for about $4.4 billion and Exelon Corp closed its $6.8 billion merger with Pepco Holdings Inc .

Westar shares rose as much as 8 percent to a record high of $57.24 on Tuesday, but were below the cash-and-stock offer price of $60 per share, suggesting that investors were skeptical the deal would go through.

Great Plains stock fell as much as 8 percent to $28.50.   Continued...