CNG accepts Dominion offer
US utility Consolidated Natural Gas (CNG) has rejected an unsolicited takeover bid from Columbia Energy in favour of a lower offer from Dominion Resources. The deal will create the USA`s fourth largest fully integrated electric and natural gas utility.
Including the assumption of debt, Dominion`s cash and stock bid values CNG at about $9bn. Dominion amended an earlier merger proposal made on May 10, guaranteeing with cash the value of its original all-stock offer to acquire the outstanding shares of CNG. Columbia, one of the largest gas suppliers in the USA, withdrew its offer when CNG announced the news.
Consolidated Natural Gas said that the Dominion offer was preferable because it had a more straightforward road to completion. The formula will also be tax-free for Consolidated shareholders. Under the terms of the agreement, each CNG common share will be converted to 1.52 shares of Dominion common stock.
Dominion said that the merger is in line with the company`s strategy to create “the nation`s premier energy company”. The combination of a natural gas utility and an electric utility is likely to encounter fewer obstacles than the merger of two gas utilities. The new company will have around 4m customers in five states and a market capitalization of $25bn.