Columbia Energy Group yesterday rebuffed a hostile takeover bid from NiSource Inc. as too low and reiterated its reluctance to negotiate with the Indiana-based company.
NiSource, which distributes electricity, natural gas and water in the Midwest and Northeast, disclosed an all-cash, $5.7 billion buyout offer after it was unable to negotiate successfully with the Herndon-based integrated gas company's board.
In a letter sent to NiSource yesterday after the board met and unanimously rejected the offer, valued at $68 a share, Columbia Chairman Oliver G. Richard III said, "the decision not to pursue your proposal is final."
But NiSource executives vowed to take the plan to Columbia shareholders. Even before Columbia's board rejected the offer, NiSource issued a statement saying it was "extremely encouraged" at the prospects for its bid after a series of meetings with Columbia shareholders. NiSource claimed the support of more than 30 percent of Columbia's shareholders for merger talks.
"We are disappointed but not surprised," said NiSource spokesman Larry Larsen. "This is another example of the entrenched management who refused to hear their shareholders. . . . It doesn't mean we're going away."
The back and forth between the companies has been characterized by bitter undertones since early April, when NiSource handed Columbia management a letter stating it was willing to buy the company in an all-cash transaction.
When the original -- and lower -- offer was rejected, NiSource Chairman Gary L. Neale said he felt he had not been dealt with straightforwardly. He noted that Richard had had his secretary call him rather than picking up the phone himself.
Shortly after the offer, Columbia made an unsuccessful attempt to acquire Pittsburgh-based Consolidated Natural Gas Co.
Some analysts had said the $68-per-share offer was a fair one, but Richard stated in yesterday's letter that Columbia's financial advisers had deemed the offer inadequate. He added that the stock does not fully reflect the company's earnings potential.
Columbia's stock closed yesterday at $62, up 18 3/4 cents. Before the offer was made public, Columbia's stock had been trading in the mid-50s.