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Ohio Legislates Against Hostile Gas Takeovers

Ohio Legislates Against Hostile Gas Takeovers

Ohio Gov. Bob Taft signed into law a bill requiring the state's Public Utilities Commission to investigate any hostile takeover bid directed at an Ohio gas utility at the time the bidder's tender offer is made.

The governor's signing of House Bill 452, sponsored by state Rep. David Goodman (R-Bexley), completed the process of a determined effort by state policy makers to close a loophole in Ohio law that would allow hostile takeovers of natural gas utilities to take place without adequate public review and scrutiny. H.B. 452 earlier had been approved by unanimous 99-0 and 33-0 votes in the Ohio House of Representatives and Ohio Senate, respectively.

The bill contains an emergency clause that makes the new law effective immediately rather than the customary 90 days from the day the Governor signs the bill.

"House Bill 452 is about disclosure and accountability. It requires companies to explain, in detail and on the record, how their hostile takeover bids would be beneficial for Ohio consumers, businesses and communities," Goodman said. "The overwhelming show of bipartisan support for this legislation should send a loud and unmistakable message to Wall Street that Ohio is serious about protecting its consumers from hostile takeovers that can't be shown to be in their best interests."

Under current Ohio law, any hostile takeover bid for a competitive business or public utility in Ohio is subject to regulatory review. However, natural gas companies are not included in this list of companies to be reviewed. The new law closes this loophole with three provisions:

It requires the PUCO to begin a public investigation of any hostile takeover bid for an Ohio natural gas utility at the time a tender offer is made, providing full public review of the details of the takeover bid early enough in the process to ensure adequate consumer protections.

The legislation requires the PUCO to issue an informational report on the proposed merger, which would provide the public and the marketplace with the information they need to make informed decisions about the potential risks and benefits of the attempted hostile takeover. It requires the company seeking the hostile takeover bid to demonstrate that its proposed takeover would promote public convenience and result in adequate, reasonably priced natural gas service.

The loophole addressed by Rep. Goodman's legislation became apparent during discussions of a current hostile takeover bid by Indiana-based NiSource, Inc. for Virginia-based Columbia Energy Group, parent company of Columbia Gas of Ohio, which is headquartered in Columbus.

Joe Fisher, Houston

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