NiSource Inc. yesterday extended its cash tender offer for Columbia Energy Group Inc. until mid-October after announcing that it had received pledges for 60 percent of the outstanding common stock of the Herdon-based gas and electric utility company.
Columbia quickly dismissed the NiSource announcement. "We do not believe that the results of the tender offer are particularly significant or surprising," the company said in a statement.
NiSource, formerly Northern Indiana Public Service Co., made an unsolicited $5.7 billion bid for Columbia on June 7, with an offer of $68 a share at a time when Columbia shares were selling at slightly more than $50. Columbia shares closed Friday at $60.25.
To gain control of the company, NiSource would need only to buy a simple majority of shares outstanding. But before any payments are made for the shares, the deal must receive regulatory approval. The 60 percent of the stock pledged represents a "referendum" by shareholders, indicating their wish that Columbia's management discuss the deal, NiSource said.
In a telephone interview, NiSource Chairman Gary Neale said the 60 percent tender offer was "a very important vote for us. We feel awfully good about it. You usually don't get that high a percentage [of the shares] this early." Neale said the shares tendered to NiSource were all from institutional investors. About 80 percent of the company is owned by institutional investors, with the remaining 20 percent held by an employees' stock-ownership plan and individual investors.
NiSource, of Merrillville, Ind., said it was extending its $68 a share offer until midnight Oct. 15. "We urge Columbia shareholders who have not done so to tender their shares to demonstrate their desire for Columbia's management to meet with us," Neale said in a statement announcing the extension of the offer.
In a subsequent interview, Neale said he would try to contact Columbia management today about a meeting. If that effort failed, Neale said NiSource hoped to use a Delaware chancery court ruling last Thursday to find out the sale price suggested by Columbia's investment advisers.
On Thursday, Neale said, the Delaware court ordered an expedited discovery process, allowing NiSource lawyers to question individual members of Columbia's board of directors. The discovery process must be completed by Sept. 24. Once in discovery, Neale said, "We'll learn what that price is."
A Columbia official yesterday described the NiSource tender offer as a "free shot for shareholders to indicate that they'd like to see a higher stock price."
Neale said the tender offer gives NiSource a stronger position for dealing with Columbia's board of directors. From the start of the takeover bid, Columbia officials have said they did not want to sell the company, but if they did, the price had to be a lot higher than NiSource was offering.