Columbia Energy Group, a Herndon-based natural gas supplier, said yesterday that its board has rejected an enhanced $6.1 billion hostile takeover bid by NiSource Inc. and instead will explore a merger of its own choosing or other strategic moves.
In a meeting Friday, Columbia's board concluded that the new bid of $74 a share by NiSource was "inadequate" and urged its shareholders to reject the offer, which is scheduled to expire Nov. 12.
The latest takeover bid by NiSource, based in Merrillville, Ind., followed an initial offer in June of $68 a share, a bid that also was spurned by Columbia's board. Investors holding about 54 percent of Columbia's stock responded favorably to NiSource's first offer before it expired Oct. 15.
Columbia has questioned whether NiSource is financially capable of carrying out the proposed acquisition. Wall Street's reaction has been muted thus far, with Columbia's shares closing Friday at $60, well below the offering price. NiSource's stock closed Friday at $19.93 3/4 a share.
Columbia Chairman Oliver G. Richard III, in a letter sent yesterday to his counterpart at NiSource, Gary Neale, said Columbia would consider "strategic alternatives," including merger, a reorganization of the company or the sale of major assets, for its shareholders' benefit.
Some market analysts have speculated that Columbia would seek a friendly "white knight" merger partner, although it isn't clear how much higher other bidders would be willing to go to acquire Columbia. A Columbia spokesman yesterday declined to elaborate on the company's future moves.
Columbia, with assets of about $7 billion, operates in all phases of the natural gas industry, including exploration and production, transmission and distribution, and also generates electric power. It has about 2 million gas customers in Virginia, Maryland, the District, Ohio, Pennsylvania and Kentucky.
NiSource has about 305,000 natural gas customers in Maine, New Hampshire and Massachusetts and also sells electricity to about 600,000 customers in Indiana.