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Exclusive: U.S. utility Evergy close to board deal with Elliott - sources

(Reuters) - Evergy Inc EVRG.N is in advanced talks with Elliott Management Corp about a deal to avert a board challenge and give the hedge fund a say on who some directors will be at the Midwestern utility, people familiar with the matter said on Tuesday.

Elliott said last month Evergy needed to improve its performance or consider a merger with another power company. In response, Evergy said it remained confident in its strategic plan as a way to generate long-term shareholder value.

Elliott could get a say on the appointment of as many as two directors on Evergy’s 15-member board, the sources said. As part of the agreement with the hedge fund, Evergy would also form a committee of directors tasked with ensuring the company is pursuing policies that boost shareholder value, the sources added.

The agreement could come ahead of a March 6 deadline to nominate board members to be voted on at Evergy’s upcoming shareholder meeting, said the sources, who spoke on condition of anonymity as the information isn’t public.

Evergy did not respond to a request for comment, while Elliott declined to comment.

Evergy’s shares jumped on the news and ended trading on Tuesday up 2.1% at $73.88, giving the company a market capitalization of close to $17 billion (13.1 billion pounds).

Formed out of the merger of Great Plains Energy and Westar Energy in 2018, Evergy serves 1.6 million customers in Kansas and Missouri. Evergy got 40% of its power from coal-fired plants in 2018, with renewable energy contributing 25% to its generation mix, according to a company presentation dated November 2019.

Elliott has argued for stopping Evergy’s share buyback program, cutting operations and maintenance costs, and deploying more cash into developing its infrastructure network, including building more renewable power generation.

The hedge fund, Evergy’s fourth-largest shareholder, has said the utility could generate around $5 billion of value if it implemented these actions.

(This story refiles to add dropped ‘as’ in third paragraph)

Reporting by David French in New York; Editing by David Gregorio