NiSource, Columbia Energy agree to merge

After a 10-month pursuit, NiSource Inc. has agreed to acquire Columbia Energy Group in an $8.5 billion cash, stock, and debt deal that will create the largest US natural gas company east of the Rockies.Deal structureUnder the merger agreement the two companies announced last week, NiSource will give $70 cash plus a stock appreciation income-linked security (SAILS) coupon with a face value of $2.60 for each share of Columbia's common stock. Moody's Investor Service described the SAILS as "a hybrid instrument, mandatorily convertible into NiSource shares in 4 years."In lieu of that, Columbia shareholders have a limited option to swap up to 30% of the company's outstanding stock ...

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