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NiSource executives assured Wall Street on Monday of a "seamless transition" as the company splits its utility and pipeline transmission segments into separate companies, but did not rule out the eventual sale of either.

NiSource CEO Robert Skaggs Jr. and other executives at an investor day presentation in New York City emphasized they plan to grow the utility business as they seek to form a new company that will take over all of NiSource's transmission business.

"That is priority No. 1, 2, 3, 4 and 5," Skaggs said in answer to one analyst's question on how the deal might affect the potential sale of either company in the future.

"I will make the observation these companies will have optionality," Skaggs added. "They will be really strong companies. They will be well-positioned companies. So they will have the freedom to consider things. But clearly the strategy, the mission and the direction is let's execute against what we've got."

NiSource has been the subject of takeover rumors since late last year, when Dominion Resources and other utility companies were reported to be interested in acquiring the Merrillville-based energy holding company.

In late trading on the New York Stock Exchange Monday, NiSource stock was trading at $40.78, up $2.20 on very heavy trading of more than 6.5 million shares.

Senior analyst Philip Adams of Gimme Credit said he took Skaggs at his word on Monday, as the CEO outlined plans for future capital investment at both the utility and pipeline businesses.

The creation of a stand-alone utility company would make it easier for someone interested in acquiring what's called a "pure play" electric and gas distribution company to buy NiSource, Adams said. But there is no evidence that is why NiSource is splitting up the company.

"The main event is the spinoff, and the spinoff doesn't happen until mid-2015," Adams said.

Gimme Credit is an independent provider of credit research with offices in New York and Chicago.

NiSource first announced Sunday it plans to create a separate company for its fast-growing gas transportation business, while keeping NIPSCO and utilities in six other states under the NiSource umbrella. Under the plan, NiSource subsidiary Columbia Pipeline Group will be spun off into a separate publicly-traded company by mid-2015.

Skaggs reiterated on Monday that NiSource headquarters will remain in Merrillville, and no layoffs are planned as a result of the split. NIPSCO is headquarted in the same building.

NIPSCO's importance was highlighted at the investor day conference by the presence of Jim Stanley, the only head of an individual NiSource utility to present at the conference.

Stanley emphasized the importance of NIPSCO and other NiSource utilities' relationships with regulators. He also pointed to the industry's achievement in getting landmark modernization legislation passed last year by the Indiana General Assembly.

"We worked very hard to build that team and build that relationship," Stanley said.

NiSource plans to undertake $1.2 billion in capital investments annually to upgrade its utilities in seven states for at least two decades into the future, according to Stanley.

NIPSCO has already started a $1.1 billion electric modernization project and an $800 million natural gas modernization project after receiving regulatory approval earlier this year.

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