Columbia Energy Group, which is trying to fend off a hostile takeover offer from another utility company, said yesterday that it will spend $400 million to buy back additional shares of its stock.
The company had indicated earlier this summer that it was considering such a move, which comes on top of an already authorized $100 million stock buyback. It's one of an array of tactics the Herndon-based natural gas and electric utility company is using to help persuade shareholders not to jump at a buyout offer of $68 a share, or $5.7 billion, from NiSource Inc. of Merrillville, Ind.
Columbia Chairman Oliver G. Richard III said the company's board authorized the increased stock buyback "because it believes Columbia's true value is not fully reflected in its current stock price." The utility firm's stock closed yesterday at $63.68 3/4, down 25 cents a share, on the New York Stock Exchange.
Donato J. Eassey, a utilities analyst with Merrill Lynch Global Securities, said Columbia's management appears to have a credible strategy for increasing the value of its stock to about $74 a share over the next year or so. But, he said, "I still think we'll see other people come in and up the ante one way or another."
Columbia has rejected NiSource's bid three times, but Richard has said the board is willing to consider offers that it believes are fair and can be executed.
And NiSource Chairman Gary L. Neale has said he will continue to pursue his takeover bid.
At the same time Columbia announced its stock buyback, it also reported net income of $26.1 million (32 cents per diluted share) for the three months that ended June 30, up almost 15 percent from earnings of $22.8 million (27 cents) during the same period a year ago. During the second quarter the company had total revenue of $396.5 million, up 2.8 percent from $385.6 million in the same period in 1998.
The company earned $176.5 million ($2.12) during the first six months of 1999, up from $170.3 million ($2.03) during the first half of 1998. Columbia's revenue was $1.05 billion, compared with $1.01 billion in the same six-month period a year ago.
CAPTION: Columbia Energy (This chart was not available)