NiSource Makes Hostile Bid for Columbia

NiSource Inc., a natural gas and power company, made a hostile bid for Columbia Energy Group of $5.7 billion in cash, or $68 a share. Merrillville, Ind.-based NiSource, which changed its name from Nipsco Industries Inc. in April, said it made the hostile offer after Columbia management rejected appeals to negotiate a buyout. NiSource wants Herndon, Va.-based Columbia for access to its lucrative energy markets in the Northeast and Southeast. Electric utilities have been buying gas companies to gain customers as deregulation lets them enter new businesses, and as gas use for power generation accelerates. Just last month, Columbia conceded defeat in a bid to buy rival gas company Consolidated Natural Gas Co. Columbia is required to present the NiSource offer to its board, though “it’s not for sale” and isn’t interested in being bought, Chief Executive Oliver Richard said in a statement. Columbia didn’t return calls requesting comment. No hostile buyout of a U.S. utility company has ever been completed, largely because the industry is heavily regulated. Getting regulators’ approval can take years, giving a buyout target time to find a friendly merger partner and discouraging investors who want a quicker payoff. The acquisition would need approval from regulators in the five states where Columbia owns utilities, the Federal Energy Regulatory Commission and the Securities and Exchange Commission. Columbia Energy shares rose $7.44 to close at $63.19, while NiSource fell 63 cents to close at $27.56, both on the NYSE.