'Numerous' Parties Eye Columbia; NiSource Extends Offer
NiSource Inc. said last week it has decided to extend its
$74/share tender offer ($6.1 billion) for Columbia Energy Group's
outstanding common shares until 12 a.m. Dec. 10, while it
participates in the negotiation process recently set up by
Columbia. Meanwhile, Columbia told the SEC yesterday it has begun
negotiating with "numerous third parties," including NiSource, who
are interested in reviewing non-public information about the
company and considering making proposals for a potential merger or
Columbia said it has sent a confidentiality agreement to
NiSource to "facilitate NiSource's participation in the process."
The agreement does not prevent NiSource from extending its tender
offer, a Columbia spokesman said.
"We have been invited to enter the process established by the
Columbia board," said NiSource CEO Gary Neale. "Therefore, we
decided to extend our tender offer prior to the date many
shareholders would tender their shares into our offer. We look
forward to sitting down with the board and management of Columbia
and remain confident that the NiSource offer is the most compelling
opportunity for Columbia and all its constituencies."
Columbia, however, already has said a combination with NiSource
is very unlikely. It rejected NiSource's most recent offer on Oct.
24, saying it planned to take offers from all comers in an effort
to increase shareholder value beyond what its own strategic plan
and any combination with NiSource could produce. NiSource was
invited to participate but Columbia CEO Oliver G. (Rick) Richard
said the company had "serious questions about the strategic and
financial merits of a combination of our two companies, as well as
about NiSource's ability to satisfy the conditions of its financing
commitments and successfully complete a transaction of the
magnitude required" (See Daily GPI, Oct. 26).
The process Columbia chose to follow involves exploring all
options, including a potential sale or all or part of the company,
a merger or reorganization (See Daily GPI, Oct. 19, June 8).
In an unrelated but important matter, Columbia is expected to
make an announcement soon regarding the sale of its wholesale
marketing and trading operations, which are based in Houston.
Columbia said in August that it planned to sell the division, which
includes about 150 employees. The division sold 945 Bcf of gas and
17.7 million MWh of power during the first six months of this year.
Columbia plans to retain its retail marketing operations and focus
its marketing efforts in the eastern U.S. where energy deregulation
is progressing at a rapid pace.
Combined retail and wholesale marketing operations posted
operating revenues of $2.5 billion and an operating loss of $32
million in the first half of this year compared to $1.2 billion in
revenues and a $13.1 million loss over the same period last year.
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