NiSource Drops Offer But Continues Pursuit of Columbia
NiSource dropped its hostile $74/share tender offer ($6.1
billion) for all of the outstanding common stock of Columbia Energy
Group (CG) last week and said it will return the 47,576,897 CG
shares, representing 58.6% of the Columbia shares outstanding, to
shareholders. It doesn't mean, however, that NiSource is giving up.
On the contrary, the company said it intends to continue the
negotiation and bidding process set up by Columbia's board.
"We are gratified by the support that Columbia shareholders have
shown for NiSource over the last eight months," said NiSource
Chairman Gary L. Neale. "We are now entering the final phase of
Columbia's defined bidding process. In order to maintain
confidentiality and flexibility in this process, it is necessary
for us to withdraw the tender offer at this time."
One source, who asked to remain anonymous, said NiSource
withdrew the offer mainly because extending it or revising it would
"tip the hand" of its competitors, who also are attempting to buy
or merge with Columbia. She also said the process is nearing
NiSource first made an offer of $67/share to Columbia last
summer, which Columbia promptly turned down as inadequate and from
the wrong strategic partner. NiSource then took its offer directly
to CG shareholders in June but received a mixed response. A
majority clearly favored the deal but it was not an overwhelming
vote of confidence at only 60%. Columbia continued to fight the
In October after NiSource raised its tender offer to $74/share
and offered Columbia management executive positions at NiSource,
Columbia's board once again determined the offer was inadequate,
stating that it was the wrong price at the wrong time and from the
wrong company. The Columbia board then authorized management to
explore strategic alternatives to generate value in excess of what
Columbia's business plan or NiSource's unsolicited proposal could
create. NiSource and other companies were invited to participate.
Columbia said it would consider a variety of possible
transactions, including a merger, reorganization or the disposition
of a material amount of stock or assets. The company stated that
would be no assurance that any discussions would result in a
transaction or other action.
The combination of NiSource and Columbia would create a company
with $13.5 billion in assets. Herndon, VA-based Columbia has $7
billion in assets and a market capitalization of about $5.2
billion. It engages primarily in gas distribution, transmission,
storage, exploration and production, propane and petroleum product
sales, electric power generation and retail energy marketing.
NiSource is a utility holding company with $6.5 billion in assets
and a market capitalization of $2.2 billion. Its subsidiaries,
which include Northern Indiana Public Service Co. and Bay State
Gas, provide electric, gas and water distribution service.
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