A day after a Delaware Judge dismissed one of three NiSourcelawsuits against Columbia Energy Group, NiSource suffered yetanother setback in its battle for a hostile takeover of Columbia.Ohio State Representative David Goodman (R-Bexley), who already haspublicly opposed the merger, has introduced legislation designed toclose a loophole in Ohio law that would allow hostile takeovers ofgas utilities to take place without public review and scrutiny.Goodman was joined as sponsor of the legislation by 77 of the 99members of the Ohio House of Representatives.

NiSource was expecting smooth sailing through the regulatoryprocess in Ohio because under current Ohio law a hostile takeoverbid for a gas utility is not subject to regulatory review. “This isa serious loophole that puts Ohio’s natural gas customers at risk,”said Goodman, who serves on the House Public Utilities Committee.”My bill would close the loophole by giving the Public UtilitiesCommission of Ohio (PUCO) clear and unambiguous authority to reviewhostile takeover bids targeting natural gas utilities in Ohio.

“This legislation is about disclosure and accountability. Itwould require companies like NiSource to explain, in detail and onthe record, how their hostile takeover bids would be beneficial forOhio consumers and good for the employees of Ohio’s natural gascompanies,” he added. “If a NiSource-Columbia merger really is goodfor Ohio, NiSource officials should support my legislation andwelcome the opportunity to stand before state regulators andtestify to that effect.”

NiSource spokeswoman Maria Hibbs said the Merrillville, IN-basedutility was unfazed both by the announcement and by several otherrecent setbacks. “The legislation being proposed is really quitesimilar to the type of review in place in the other states where wehave to go for regulatory approval. So we will be prepared to shareour vision for the combination and why it will be beneficial forcustomers and shareholders. Our basic corporate philosophy is towork with regulatory bodies at all levels and government officialsat all levels.” She said there has been no change in the company’soffer and that it is as determined as ever to carry out itstakeover plan.

If passed and signed by the governor, the Ohio legislation wouldrequire the PUCO to begin a public investigation of any hostiletakeover bid for an Ohio natural gas utility at the time when atender offer is made. It also would prohibit the PUCO fromapproving any hostile takeover bid for an Ohio natural gas utilityunless the Commission determines that the merger would promoteconvenience and result in adequate, reasonably priced gas service.In addition, it would require the company seeking the hostiletakeover bid to demonstrate that its proposed takeover would infact serve the public’s best interests.

Goodman said the bill has strong bipartisan support and “shouldsend a loud and unmistakable message to potential Wall Streetraiders that Ohio is serious about protecting its consumers fromhostile takeovers that can’t be shown to be in their bestinterests.”

Several elected officials joined Goodman at a news conferenceheld near Columbia Gas of Ohio’s headquarters in downtown Columbus.Supporters of the legislation included State Representative andPublic Utilities Committee Chair Priscilla Mead (R-Columbus) andState Rep. Joyce Beatty (D-Columbus).

In July, Goodman warned regulators and legislators a takeover ofColumbia by NiSource could lead to “the closing of the Columbusheadquarters for Columbia Gas of Ohio, hundreds of lost jobs inColumbus and other Ohio cities, higher prices for Ohio consumers,and diminished ability of Columbia Gas to provide a reliable sourceof natural gas for millions of Ohioans.” Goodman also noted thatthere have been concerns on Wall Street over the $6 billion loanNiSource would require to complete the purchase. He urged the PUC,the Ohio Consumers Counsel, the Ohio Attorney General’s office, theOhio General Assembly and other state agencies to “carefully andthoroughly investigate the proposed merger to ensure that Ohioconsumers are not harmed, Ohio jobs are not threatened and Ohiolaws are not violated,” by the proposed hostile purchase.

NiSource’s $68/share tender offer to Columbia shareholders beganJune 25, and the Aug. 6 deadline was extended to Oct. 15. As ofAug. 6, 60% of Columbia’s outstanding shares had been tendered,according to NiSource. Columbia has repeatedly rejected NiSource’sovertures, saying the offer is at the wrong price, the wrong time andis being made by the wrong company (see Daily GPI, June 8, 11,25, 29; July 7, 15,28; Aug. 10; Sept. 23)

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