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FORM 8-K
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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
CURRENT REPORT
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Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (date of earliest event Reported) April 18, 1999
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COLUMBIA ENERGY GROUP
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(Exact name of registrant as specified in its charter)
Delaware 1-1098 13--1594808
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
13880 Dulles Corner Lane, Herndon, VA 20171-4600
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(Address of principal executive offices)
Registrant's telephone number, including area code (703) 561-6000
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Item 5. Other Events
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Information contained in a News Release dated April 18, 1999 is
incorporated herein by reference.
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SIGNATURE
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Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Columbia Energy Group
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(Registrant)
By /s/ J. W. GROSSMAN
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Vice President & Controller
Date: April 19, 1999
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For Immediate Release CONTACTS:
April 18, 1999 Columbia Energy Group
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Thomas L. Hughes (Financial Community)
(703) 561-6001
R.A. Rankin, Jr. (News Media)
(703) 561-6044
Kekst and Company
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Michael Freitag/Jessica Barist (News Media)
(212) 521-4800
COLUMBIA ENERGY GROUP PROPOSES ACQUISITION OF CNG
FOR $70 PER SHARE IN CASH AND STOCK
COLUMBIA SEEKS NEGOTIATED MERGER;
PROPOSAL NOT SUBJECT TO ANY FINANCING CONDITIONS
HERNDON, Va., April 18 -- Columbia Energy Group today announced that it
has formally proposed a negotiated merger transaction between Columbia and
Consolidated Natural Gas Company (CNG) in which CNG shareholders would receive
$70 per share of CNG common stock, consisting of $24.50 in shares of Columbia
(with the actual number of shares based on Columbia's stock price at the closing
and subject to a customary two-way collar) and $45.50 in cash. Based on closing
market prices on April 16, 1999, this represents a premium of 33.5 percent to
CNG's market price and a premium of 21 percent to Dominion Resources, Inc.'s
February 1999 offer to merge with CNG.
The proposal is not subject to any financing conditions, but is
conditioned on negotiation and execution of a mutually acceptable merger
agreement. Columbia's proposal was made in a letter sent today by Oliver G.
Richard III, chairman, president and CEO of Columbia, to George A. Davidson,
Jr., chairman and CEO of CNG.
Mr. Richard said, "Our proposal for a strategic business combination
with CNG is consistent with our strategies for growth in the regulated and
non-regulated sectors of our business, and is a compelling combination for the
shareholders and customers of both companies. These strategies include driving
earnings growth by operational excellence, expansion projects, and creativity
within the transmission and distribution segments, as well as redeploying cash
in higher-return non-regulated businesses and positioning the group to prosper
in the emerging deregulated energy industry. The strategies would be well served
by this transaction. We believe we are uniquely positioned to capture the full
value of a combination with CNG and are hopeful that we will have the
opportunity to explore such a merger more fully."
Mr. Richard also said, "Based upon our preliminary analysis of publicly
available information, we believe this transaction has the potential for pre-tax
savings of approximately $250 million in Year Two and approximately $300 million
in subsequent years examined."
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The text of the letter to CNG is as follows:
Dear George:
We were disappointed to learn on February 22, 1999 that you and your
Board of Directors had authorized Consolidated Natural Gas Company (CNG) to
enter into a definitive merger agreement with Dominion Resources, Inc.
(Dominion). We believe our proposal, which we had submitted to you on February
20th and provided for a value of $66 to $70 per share of CNG's common stock, was
compelling.
We continue to believe a combination of our two companies would be an
excellent financial and strategic fit. Accordingly, on behalf of Columbia Energy
Group (Columbia) and our Board of Directors, I am hereby making a formal
proposal of a negotiated merger transaction between Columbia and CNG in which
CNG shareholders would receive $70 per share of CNG common stock, consisting of
$24.50 in shares of Columbia (with the actual number of shares based on our
stock price at the closing and subject to a customary two-way collar) and $45.50
in cash. This represents a premium of 33.5 percent to CNG's market price and a
premium of 21.0 percent to Dominion's offer based on closing market prices on
April 16, 1999.
We have adequate sources of financing and therefore our proposal is NOT
subject to any financing conditions. Although our proposal is conditioned on
negotiation and execution of a mutually acceptable merger agreement, we are
prepared to negotiate a merger agreement with substantially similar
representations, warranties, closing conditions and termination rights as those
in the current Dominion agreement. We are prepared to move as quickly as
possible to close the transaction.
Clearly, our proposal is more favorable to CNG shareholders than a
merger with Dominion. In addition to the obvious immediate benefits of a higher
premium with a substantial cash component, there are clear strategic benefits to
a combination of our two, similar companies that simply are not available under
the proposed Dominion transaction. These benefits include significant cost
savings and other synergies that can enable us to provide better value and
service to our customers while delivering enhanced value to our shareholders. We
believe the synergies achieved from our proposed transaction would significantly
exceed those expected under the Dominion offer and the transaction would be
accretive to our earnings per share in the second year. Accordingly, we believe
your shareholders will react more favorably to a merger of CNG and Columbia than
they have to the proposed Dominion transaction, the value of which has declined
significantly since being announced.
We would welcome the opportunity to meet with you and other members of
your Board of Directors and senior management and advisers as soon as
practicable to explore more fully the benefits of our proposal. To effect such a
meeting, we are prepared to enter into a confidentiality agreement and, among
other things, review the disclosure schedules you have prepared in connection
with the Dominion transaction. We further believe that your fiduciary duties
require you to consider our proposal with your Board of Directors and that,
consistent with the terms of Section 7.11 of your current agreement with
Dominion, you are permitted to enter into discussions with us.
Our Board fully supports our proposal, which is consistent with
Columbia's long-term growth strategy. As you can appreciate, with a proposal of
this type, time is of the essence. Accordingly, if you do not respond favorably
to our proposal by May 3, 1999, we will withdraw it. I look forward to hearing
from you shortly and to working with you so that we may bring our clearly
superior proposal to a vote of your shareholders.
Sincerely yours,
Oliver G. Richard III
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Columbia Energy Group, based in Herndon, Va., is one of the nation's
leading energy services companies, with 1998 revenues of nearly $6.6 billion and
assets of about $7 billion. Its operating companies engage in all phases of the
natural gas business, including exploration and production, transmission,
storage and distribution, as well as commodities marketing, energy management,
propane sales and electric power generation, sales and trading. Columbia
companies serve customers in 34 states and the District of Columbia; over 60
percent of America's gas and electric revenue is derived in and around its
principal operating region.
Information about Columbia Energy Group (NYSE:CG) is available on the
Internet at www.columbiaenergygroup.com.
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This release contains forward-looking statements (as defined by Section
21E of the Securities Exchange Act of 1934, as amended) which reflect
management's current views with respect to certain future events and
performance, including statements regarding cost synergies, accretion to
earnings, and growth in the regulated and non-regulated sectors. The following
factors are among those that could cause actual results to differ materially
from these forward-looking statements, which involve risks and uncertainties,
and that should be considered in evaluating any such statement: the failure of
CNG to negotiate with Columbia concerning the proposed transaction; failure to
obtain stockholder or regulatory approvals; higher-than-expected integration
costs; delay in obtaining or inability to obtain reductions in overhead costs,
purchasing costs, or other operational efficiencies; loss of customers;
conditions or restrictions imposed during the regulatory approval process;
weather; supply and demand for natural gas, electricity and propane; and changes
in general economic conditions.
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