NiSource to split into two publicly traded companies

Merrillville-based gas and utility company NiSource Inc. announced Sunday that it plans to split off its natural gas pipeline and related businesses into a stand-alone publicly traded company that will be based in Houston.

The new company, Columbia Pipeline Group Inc., will control the business of transporting and storing natural gas. It is expected to be listed on the New York Stock Exchange and has 15,000 miles of natural gas transmission pipelines and nearly 300 billion cubic feet of underground natural gas storage capacity.

NiSource will remain headquartered in Merrillville and will continue to provide natural gas to more than 3.4 million customers in seven states under the Columbia Gas and NIPSCO brands. It will also continue to provide electric distribution, generation and transmission services for approximately 450,000 NIPSCO electric customers in northern Indiana.

NiSource said the split is expected to occur in the middle of 2015. The combined company currently has a market capitalization of $12.16 billion.

Splitting off the natural-gas pipeline business will allow the new business to form a tax-advantaged master-limited partnership, or MLP, to help exploit the shale boom. The MLP will allow Columbia to raise cash to expand pipeline networks while retaining control of assets.

A 44-percent surge in U.S. gas output during the past decade, brought on by the expansion of hydraulic fracturing, has driven demand for new pipelines to deliver the fuel to market. NiSource has announced plans to spend about $8 billion to $10 billion over the next five to 10 years to expand and upgrade pipelines serving the Marcellus and Utica shale formations.

“We think the MLP model offers strategic benefits to NI and represents its most attractive alternative financing solution,” Christopher Sighinolfi, an analyst for Jefferies Group LLC in New York, said in a Sept. 22 note to clients.