Columbia Energy Group, last month's predator, is now takeover bait.

The Herndon-based utility company recently failed in its bid to acquire Consolidated Natural Gas Co., a deal it pursued in part to ward off potential acquirers. Yesterday, NiSource Inc., a gas and electric utility company based in Indiana, said it launched a hostile bid to take over Columbia after management had rebuffed an all-cash $5.7 billion buyout offer valued at $68 a share.

"We believe that all constituencies will find this offer to be so compelling that Columbia's board will no longer be able to ignore it," said NiSource's chairman and chief executive, Gary L. Neale. The offer represents a 30.7 percent premium over the average closing share price for Columbia's common stock for the 20 trading days ended June 4, he said.

Neale said the merger had strategic value because the combined company would be able to link gas supplies in the Chicago area, which are in excess, to high-volume markets in the Northeast. He also noted that the merger would not require layoffs.

Neale -- in an interview from a car on his way to talk to Prudential Investors of Newark, one of Columbia's large institutional shareholders -- said that he and Columbia Energy Chairman Oliver G. Richard III had had a number of discussions before April about the logic of combining the two companies. But when NiSource handed Columbia management a letter at an April 1 meeting saying that it was willing to buy the company in an all-cash transaction, Richard "looked taken aback," Neale said.

The two men haven't spoken since then, he said. Neale said Richard said at the time that he didn't want to put the company in play -- something that may result from yesterday's hostile takeover offer. According to Neale, Richard said he would take the offer to the board and set up April 16 as a negotiating date. But instead Richard's secretary called to say that Columbia had scheduled a special board meeting for that day.

Neale said he was notified on April 18 that his offer was rejected. That same day, Columbia started its ultimately unsuccessful attempt to wrest Consolidated Natural Gas away from Dominion Resources, which had already struck a merger deal with CNG.

"I certainly felt that I hadn't been dealt with straightforwardly on it," Neale said yesterday. "I didn't even get a call from Rick on it. I got a call from his secretary."

Richard replied yesterday in a letter to Neale: "Columbia Energy Group is not for sale and is not interested in any merger transaction in which another company acquires control of Columbia." But he said the offer would be considered by Columbia's board at an unspecified date. The company declined to comment beyond the letter.

Analysts said yesterday that the $68-a-share price appeared to be a fair one. Columbia's stock closed yesterday at $63, up $7.25. "It's a reasonable number, but I think Columbia will go for more," said Donato J. Eassey, an industry analyst at Merrill Lynch Global Securities in Houston.

M. Carol Coale, a utilities industry analyst with Prudential Securities in Houston, said she had assumed a net asset value of $67 a share for Columbia, "so it's in line with our assumptions," she said. NiSource said it believes it can obtain more than 12 percent earnings growth by buying Columbia, but Coale said that was an ambitious target.

There also may be "cultural issues," she said. "I would say that the hostile nature of the letter sent to Columbia's CEO had less than friendly overtones, and it's unsure what role Columbia's top management would play in the combined company." Still, Columbia's shareholders might be happy with a $68-per-share offer for a company whose stock was down about 8 percent on a year-to-date basis as of Friday, she said.

NiSource Inc. -- formerly known as Nipsco, for Northern Indiana Public Service Co. -- wants to be a regional power in the rapidly consolidating utility industry, stretching from the Midwest to New England. The company has a market capitalization of approximately $3.6 billion and is about 60 percent natural gas and about 40 percent electric power. NiSource closed at $27.50 yesterday, up 68 3/4 cents.

Columbia has a market capitalization of about $4.7 billion and is an integrated gas company that explores for, produces, transports and sells gas to retail and wholesale customers.