When assessing the market of an acquisition target, allcustomers are not equal, Columbia Energy Group Chairman Oliver G.Richard told a merger and acquisition symposium this week.

For instance, the customers of an older utility just moving intothe competitive arena could decamp to competing suppliers. “Why buya company whose customers are leaving,” Richard asked. Of course,the customers of Columbia Energy Services don’t fit in thatcategory. “Our customers number more than 300,000 customers hardwon through competition and 350 employees with the intellectualcapital” to service those customers. That customer base “already isequivalent to what we might have obtained through the acquisitionof a small energy company….at less expense perhaps than atraditional acquisition,” Richard added.

In recent years Columbia has avoided “the urge to merge at allcosts. We’ve walked away from deals because the premium to be paidwould have been too high and the valued returned would have beentoo low.”

Listing lessons learned for the Twelfth Annual Utility M&ASymposium in New York City, Richard stressed speed andcommunication once the deal is done. The acquiring company should”put in place a dedicated team to integrate employees and assetsquickly and communicate on a personal level completely andquickly.” Looking at a prospect, a company should “learn theregulatory environment as soon as possible.”

Richard believes “Consolidation will continue to occur – but inmore and varied forms. Competition and consolidation are makingcritical mass more critical than ever before…..There are some4,000 local utilities in the United States. It’s reasonable toassume each of them is not equally skilled or has the scale neededto perform all facets of the energy business….that alone makesfurther consolidations inevitable.”

©Copyright 1999 Intelligence Press Inc. All rights reserved. Thepreceding news report may not be republished or redistributed, inwhole or in part, in any form, without prior written consent ofIntelligence Press, Inc.