Ohio Bill Would Bolster Columbia's Defense
NiSource suffered two significant setbacks last week in its
battle for a $5.7 billion hostile takeover of Columbia Energy
Group, but the company vowed to continue its pursuit of Columbia.
A Delaware Court of Chancery judge dismissed a NiSource lawsuit
aimed at forcing Columbia to reconvene its annual stockholders'
meeting in order to elect a 13th member to the board of directors.
NiSource claimed Columbia acted illegally in not filling the
vacancy at its last annual meeting, and NiSource was seeking to
elect its own representative for Columbia's board as part of its
campaign to annex the Herndon, VA, company. But the judge said on
Wednesday he did not believe there was a legal or practical basis
for restaging the annual meeting. NiSource, which made the takeover
bid in early June, has two other lawsuits targeting Columbia still
to be decided.
Meanwhile, Ohio State Representative David Goodman (R-Bexley),
who already has publicly opposed the merger, has introduced
legislation designed to close a loophole in Ohio law that would
allow hostile takeovers of gas utilities to take place without
public review and scrutiny. Goodman was joined as sponsor of the
legislation by 77 of the 99 members of the Ohio House of
NiSource was expecting smooth sailing through the regulatory
process in Ohio because under current Ohio law a hostile takeover
bid for a gas utility is not subject to regulatory review. "This is
a serious loophole that puts Ohio's natural gas customers at risk,"
said Goodman, who serves on the House Public Utilities Committee.
"My bill would close the loophole by giving the Public Utilities
Commission of Ohio (PUCO) clear and unambiguous authority to review
hostile takeover bids targeting natural gas utilities in Ohio.
"This legislation is about disclosure and accountability. It
would require companies like NiSource to explain, in detail and on
the record, how their hostile takeover bids would be beneficial for
Ohio consumers and good for the employees of Ohio's natural gas
companies," he added. "If a NiSource-Columbia merger really is good
for Ohio, NiSource officials should support my legislation and
welcome the opportunity to stand before state regulators and
testify to that effect."
If passed and signed by the governor, the Ohio legislation would
require the PUCO to begin a public investigation of any hostile
takeover bid for an Ohio natural gas utility at the time when a
tender offer is made. It also would prohibit the PUCO from
approving any hostile takeover bid for an Ohio natural gas utility
unless the Commission determines that the merger would promote
convenience and result in adequate, reasonably priced gas service.
In addition, it would require the company seeking the hostile
takeover bid to demonstrate that its proposed takeover would in
fact serve the public's best interests.
Goodman said the bill has strong bipartisan support and "should
send a loud and unmistakable message to potential Wall Street
raiders that Ohio is serious about protecting its consumers from
hostile takeovers that can't be shown to be in their best
It's not the first time Goodman has spoken out against the
proposal. In July, he warned regulators and legislators a takeover
of Columbia by NiSource could lead to "the closing of the Columbus
headquarters for Columbia Gas of Ohio, hundreds of lost jobs in
Columbus and other Ohio cities, higher prices for Ohio consumers,
and diminished ability of Columbia Gas to provide a reliable source
of natural gas for millions of Ohioans."
Several elected officials joined Goodman last week at a news
conference held near Columbia Gas of Ohio's headquarters in
downtown Columbus. Supporters of his legislation included State
Representative and Public Utilities Committee Chair Priscilla Mead
(R-Columbus) and State Rep. Joyce Beatty (D-Columbus).
NiSource spokeswoman Maria Hibbs said last week following
Goodman's announcement that the Merrillville, IN-based utility was
unfazed by the legislation, which she said would merely put the
state on the same regulatory footing as the other states in which
NiSource would need approval of a Columbia takeover.
"We will be prepared to share our vision for the combination and
why it will be beneficial for customers and shareholders [in
Ohio]," she said. "Our basic corporate philosophy is to work with
regulatory bodies at all levels and government officials at all
levels." Hibbs also said the legal setback last week was not enough
to alter the company's course. She said there has been no change in
the company's offer and that it is as determined as ever to carry
out its takeover plan.
NiSource's $68/share tender offer to Columbia shareholders began
June 25, and the Aug. 6 deadline was extended to Oct. 15. As of
Aug. 6, 60% of Columbia's outstanding shares had been tendered,
according to NiSource. Columbia has repeatedly rejected NiSource's
overtures, saying the offer is at the wrong price, the wrong time
and is being made by the wrong company.