NGI The Weekly Gas Market Report
It looks like NiSource is going to get a run for its money inthe second round of a bidding war for Columbia Energy Group.Columbia informed the Securities and Exchange Commission yesterdaythat it has received “preliminary indications of interest fromnumerous third parties” during an ongoing open house on the companyand its assets.
As a result, Columbia plans to move into the second round ofbidding, which will be open only to those parties who have shown aninterest that reflects a higher value than the hostile $74/share($6.1 billion) bid by NiSource Inc. NiSource, however, will beamong those invited to participate in the second round, Columbiasaid. There are “no guarantees that a transaction will becompleted,” the company added.
Columbia turned down NiSource’s revised bid shortly after it wassubmitted Dec. 17 and decided to examine its other options,including a potential sale of all or part of the company. NiSourcehad first offered $68/share but was turned down repeatedly byColumbia’s board. Nevertheless, about 60% of Columbia’s outstandingshares have been tendered to NiSource.
PaineWebber analyst James Yannello said this latest SEC filingindicates Columbia has made the right decision by testing themarket for its assets. “We (along with others) have long held thatColumbia Energy Group was worth well north of the original$68/share all-cash offer; and through an improved bid, likely worthnorth of the revised $74/share cash offer. Today’s announcement (aformal filing with the SEC; not simply a press release ormanagement statement), could be perceived as lending credibility tothis viewpoint as well as our long-held view of the scarcity valueassociated with Columbia’s strategically located asset portfolio.”Yannello said he believes the odds that Columbia will be sold inits entirety for a price greater than $74/share “are greatlyincreasing.”
Columbia share prices rose sharply yesterday on the news tonearly $62/share before ending the day up $2.50 at $60.50/share.
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