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 TheNorthern Natural Gas Building, the former headquarters of InterNorth inOmaha, Nebraska. | |
| Formerly | Northern Natural Gas Company (1931–1980) |
|---|---|
| Industry | Energy |
| Founded | 1931; 95 years ago (1931), inOmaha, Nebraska, U.S. |
| Defunct | 1985 (1985) |
| Fate | Merged withHouston Natural Gas to becomeEnron |
| Successor | Enron |
| Headquarters | Northern Natural Gas Building,, United States |
Area served | United States |
InterNorth Inc. was an Americanenergy company headquartered at theNorthern Natural Gas Building inOmaha, Nebraska, United States. It specialized innatural gas pipelines but also a force in theplastics industry, coal and petroleum exploration and production. It was a predecessor toEnron Corporation.
InterNorth was founded in 1931 asNorthern Natural Gas Company. Over the years, it acquired several other subsidiaries, such as Northern Liquid Fuels Company, Northern Petrochemicals Company, Northern Propane Gas Company, Northern Border Pipeline Company, and People's Natural Gas. In March 1980, Northern Natural Gas reorganized as a holding company, InterNorth. They operated the largest natural gas pipeline in North America (approximately 36,000 miles of pipeline).[1]
In 1980-81, the company launched an unsolicited takeover bid forCrouse-Hinds Company, which wound up being acquired byCooper Industries the following year.[2] The company continued to pursue expansion opportunities. In 1983, the company purchased the Belco Petroleum Company, aFortune 500oil exploration and development company founded byArthur Belfer;[3] and, in 1985, reached a deal, seen by some as overpriced, to acquire the smaller competitorHouston Natural Gas Company (HNG). InterNorth was an arbitrage target and acquired HNG as apoison pill.
Following its takeover of HNG, InterNorth was renamed toHNG/Internorth,[1] a name it would keep for nine months before being rechristenedEnron Corp. in April 1986.[4]
Although intended to secure InterNorth's independence, the HNG takeover proved a "wag-the-dog" transaction: despite an initial plan for dual headquarters in Omaha and Houston, with InterNorth CEOSamuel Segnar in control, the company soon was based entirely inHouston and run by HNG's CEO,Ken Lay. Initially, Lay and his secretary were on board with design consultancyLippincott & Margulies’s pitched name, Enteron, due to the positive connotations of the words "enter" and "on', though it was soon discovered to be a medical term for the intestines. The markets reacted with hilarity and within a month the name up for vote was changed to Enron.
The merged company was a target of corporate raider Irwin Jacobs of Minneapolis. Lay "borrowed" over $400 million from theemployee stock ownership program tobuy back Jacobs stock, so he could keep his job and cover other financial losses of Enron as early as 1987. Lay then froze the ESOP for seven years except for retirement or death benefits.
The most valuable asset of Internorth had been Northern Natural Gas, which was at one time the largest natural gas distributor in North America. After the bankruptcy of Enron, Northern Natural Gas briefly became part ofDynegy Corp, whose chairman, Daniel Dienstbier, had been president of Northern before Ken Lay seized control of Internorth. Dynegy then sold Northern toWarren Buffett'sBerkshire Hathaway who moved it back to Omaha.
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