(Reuters) - Evergy Inc EVRG.N plans to remain independent after the board of the U.S. Midwest utility decided that bids solicited from prospective merger partners did not offer sufficient value, two sources familiar with the matter said on Tuesday.
The news dropped Evergy’s stock more than 10% to its lowest price since mid-May.
The company had been reviewing strategic options under a March agreement with activist investor Elliott Management Corp, which earlier this year demanded Evergy find a merger partner or implement changes to bolster the utility’s stock price.
A number of bidders submitted offers for Evergy by last week’s deadline, and they were reviewed by the company’s board in consultation with its advisers in recent days.
These offers were not considered acceptable, and the company will unveil a new strategic plan to operate as an independent company on Wednesday, as part of its scheduled earnings announcement, the two sources said, speaking on condition of anonymity as the information is not public.
A spokeswoman for Evergy declined to comment. Bloomberg News reported earlier on Tuesday that Evergy had decided to forgo a sale.
Evergy’s stock closed Monday at $62.68, valuing the company at $14.2 billion, below the $73 it traded at in early March, when Evergy struck the Elliott agreement.
This fall-off, caused by the pandemic, meant selling now was not the prudent move, one of the sources said.
Disclosing a stake which made it the firm’s fourth-largest shareholder, Elliott said in January some $5 billion of value could be added if Evergy cut costs. Alternatively, Evergy should merge with another utility to generate better performance.
The March accord, under which Elliott pledged to support Evergy’s board and management until Nov. 2, 2020, has drawn scrutiny, with the Kansas regulator saying in June it would probe whether proposed actions would be bad for customers.
Formed out of the merger of Great Plains Energy and Westar Energy in 2018, Evergy serves 1.6 million customers in Kansas and Missouri.
Reporting by David French in New York; Editing by Chris Reese and Lisa Shumaker
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