Big Deals.

Indiana's largest mergers and acquisitions in 1999

Indiana companies saw their fair share of mergers in 1999, with the top 10 transactions having a combined value approaching $20 billion (see list beginning on page 26). Keeping in mind Indiana's lack of a significant number of big technology and media companies in the state, the large transactions of 1999 were in sectors typical of those taking place across the country.

One sector seeing an escalated level of activity is the energy sector. It's this sector that claimed the largest deal in Indiana, with NiSource Inc.'s unsolicited bid to acquire Columbia Energy Group. This has been a hostile story, with Columbia Energy's management not interested in the bid:

NiSource started with an initial bid of $68 per share and later raised it to $74. Columbia Energy is considered a good acquisition for many companies and in October, after rejecting the NiSource bid, informed Wall Street that it is interested in others. In filings with the Securities and Exchange Commission in late December, Columbia indicated it has had interest from numerous third parties. This story will continue well into 2000.

The financial sector has been a hotbed for mergers and acquisitions for several years. It remained hot in '99 with Fifth Third Bancorp making two notable purchases of Peoples Bank Corp. for more than $200 million and the much larger deal with CNB Bancshares in Evansville for more than $2 billion, the state's second-largest deal.

This sector will likely see more activity in Indiana because of the predominance of smaller banks and insurance companies in the state. Consolidation is necessary for these businesses to compete effectively and realize the economies of scale necessary to make reasonable profits.

Other forces also will continue to drive merger activity. The most obvious is the bull market in stocks that has persisted for nearly two uninterrupted decades. Many companies have currency in their high stock price that makes acquisitions more economical. As our economy becomes more global in nature and competition heightens, larger-scale operations will likely be the ones to prosper.

Mark A. Patton is president Investment Management, Indianapolis.