Done Deal: NiSource, Columbia Merger Approved
NiSource Inc. and Columbia Energy Group formally completed their merger last week, after the U.S. Securities and Exchange Commission gave it final approval. The combined company, which will serve 3.6 million gas and electric customers in nine states, will trade as NiSource on the New York Stock Exchange. Columbia's shares ceased trading before the market opened last Thursday.
The SEC order had one requirement: To comply with the Public Utility Holding Company Act of 1935, NiSource must divest IWC Resources Corp., a water operations subsidiary based in Indianapolis, within three years. The Act requires utility holding companies divest operations not integral to their primary business.
The $6 billion merger, first announced in a hostile takeover bid June 1999 (see NGI, June 14), establishes one of the largest U.S. natural gas distributors east of the Rocky Mountains. NiSource will access a high growth energy corridor that is home to 30% of the U.S. population and 40% of its energy consumption.
NiSource CEO Gary L. Neale applauded SEC's decision to grant final approval of the merger, saying the transaction creates "a super-regional energy powerhouse stretching from the Gulf of Mexico to Chicago and New England." He said the approval's "fast track" was a "testament to the hard work on both sides of the regulatory table" and the teamwork of both companies' employees.
Under the merger agreement, Columbia shareholders had the right to elect to receive NiSource stock for their Columbia shares until Oct. 30. According to NiSource, more than 77% of Columbia's shares elected to receive NiSource stock, with the exchange ratio 3.04414 NiSource shares for each Columbia share.
Shares not exchanged for stock will be exchanged for $70 in cash and $2.60 face amount of a Stock Appreciation Income Linked Securities, or SAILS, a unit consisting of a zero coupon debt security and a forward equity contract. Existing NiSource shares will automatically be converted into common stock of the new corporation.
Carolyn Davis, Houston
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