Here's an interesting one for you strategic thinkers: CG, selling at 63.1/2
NiSource is trying to buy Columbia Energy Group (CG) for $68 cash.
CG has rebuffed NiSource at least twice. NiSource says if CG would meet and discuss, they (Nisource) might consider upping the ($68) offer. CG says now (today), we'll think about it and get back to you in 10 days. NiSource says, we'll take our offer directly to CG stockholders by "launching a tender offer" (whatever that means) tomorrow (Fri.).
On another front, in May CG offered cash and stock = $6.7B for Consolidated Natural Gas. (CG lost out though to another firm that offered a larger cash component). Note that the NiSource bid ($68) values CG at $5.7B.
Something interesting is going to happen! But what?? If CG makes themselves unattractive by quickly going out and making an offer for somebody else, or otherwise using up the capital they apparently have, or if NiSource wavers in its desire for CG, then there's no deal and CG stock tanks. At the time the first NiSource offer for CG was announced, CG traded at 55.75. So if it all goes kaput, maybe the downside is 63.1/2- 55.3/4 or about 8 points.
But there might be a deal in there somewhere. Upside being 68-63.5 or 4.1/2 points (assuming NiSource doesn't up its offer).
I'll bet on NiSource - and it's a bet -g-. They read like they are tough and determined. Buying today CG at 63. 1/2.
(And when I bet last year on Mellon accepting the BT $90 offer and Mellon didn't (MEL was at $70), it took about one year for the subsequent MEL stock drop to recover to the $70 level.) So at this point CG is a risky, although interesting, bet, IMO, based on my prior experience with recalcitrant and entrenched management. |
