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NiSource Takes Offer to Columbia Shareholders

NiSource Takes Offer to Columbia Shareholders

NiSource is taking its $68/share offer ($5.6 billion) directly to Columbia Energy Group shareholders today and said it has filed litigation against Columbia and its directors in the Delaware Chancery Court in an attempt to gain an opportunity to nominate a director to fill a vacant seat on Columbia's board. The seat was vacated in May when one of Columbia's directors retired, but Columbia failed to call for a shareholder vote on a replacement at its annual meeting last month, NiSource said.

Columbia CEO Oliver G (Rick) Richard III rejected NiSource's overtures earlier this month, saying Columbia is "not for sale and is not interested in any merger transaction in which another company acquires control of Columbia."

In a letter to Richard this week, NiSource Chairman Gary Neale said Columbia's shareholders "have lost faith in your board's willingness to act in their best interests." NiSource claims shareholders representing 45% of Columbia's outstanding shares have "expressed support" for its proposal.

Neale said NiSource will attempt to secure all 83 million outstanding shares of Columbia common stock and intends to nominate "a slate of nominees for election" to Columbia's board at its next annual meeting.

"In the meantime, we intend to nominate an independent candidate for election to your board of directors to fill the fifth Class III directorship required under your certificate of incorporation.. We regret that we have to resort to these actions," Neale added. "We have made it clear that we intend to pursue this transaction to its end..."

Many observers and analysts have told NGI NiSource's $68/share offer is too low and an offer in the low- to mid-$70s/share would be more in line with Columbia's performance. Neale confirmed yesterday NiSource is prepared to increase its cash offer if the Columbia board "agrees to cooperate with us and negotiate a definitive merger agreement. We are spending valuable resources pursuing this transaction without your cooperation; resources that could be better utilized to deliver higher value to your stockholders."

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