The chairman of NiSource Inc., a gas and electric utility company that was rebuffed last week in its hostile takeover bid for Columbia Energy Group, said he will decide next week whether to proceed with a tender offer or another takeover maneuver.
Gary L. Neale, chief executive of the Indiana-based company, said he believes the odds of succeeding with the merger are 50-50. But he said that he intends to keep up the pressure. "The issue is not going to go away," Neale said.
NiSource launched its all-cash $5.7 billion buyout offer just over a week ago, offering shareholders in the Herndon-based energy company $68 a share -- or a premium of about 30 percent over the price at which it had been trading.
Columbia's stock rose $1.56 1/4, to $63.75, while NiSource fell 6 1/4 cents, to $27.37 1/2.
But Columbia's board of directors rejected that bid last Thursday. On Monday, Columbia unveiled a plan to build a telecommunications network along its natural gas pipeline system in an effort to underscore its potential for long-term growth.
In the meantime, Neale has been meeting with industry analysts and actively courting Columbia's institutional shareholders, attempting to convince them that their interests are best served by a merger with his company. NiSource, which is smaller in terms of market capitalization than Columbia, hopes to create a strong regional company that would be able to link gas supplies in the Chicago area, which are in excess, to high-volume markets in the Northeast that are served by Columbia.
Neale said he believes about a third of Columbia's institutional shareholders support his bid. He said his next steps could include a tender offer or coordinating an effort by the larger shareholders to speak to Columbia's board.
NiSource first offered to buy Columbia on April 1. On April 18, Columbia chairman Oliver G. Richard III rejected the offer and launched his own -- ultimately unsuccessful -- bid for Consolidated Natural Gas Co. CNG had already agreed to merge with Dominion Resources Inc. and stuck by that deal.
Even as that takeover fight was underway, Neale said he called Richard and tried to convince him that Columbia stood a better chance of winning if it combined with NiSource. "He said he'd call me if he needed me," Neale said yesterday. Richard didn't call back.