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Former Indiana Sen. Dan Coats (R) is set to announce Wednesday that he will challenge Sen. Evan Bayh (D), and there are already signs that he will run with the backing of influential Republicans.

Coats, who retired from the Senate in 1999 and was succeeded by Bayh, released a statement to the Indiana-based Howey Political Report that said he has “become increasingly alarmed and frustrated about the direction of our country and the failure by leaders in Washington to listen to those they were elected to represent.”

Coats, now a senior adviser with the firm King & Spalding, drew support for his Senate bid from Rep. Mike Pence (R-Ind.), who had considered challenging Bayh but recently passed on the race.

“I am very excited about the possibility that former Senator Dan Coats may run for the United States Senate in 2010 and I sincerely hope he does it,” Pence said in a statement. “His integrity and conservative record would make him the ideal candidate for Hoosiers. If he runs, I will support him.”

Meanwhile, in a sign that Democrats are concerned about having another seat put into play this year, the Democratic Senatorial Campaign Committee released a statement that attacked Coats as a “federally registered lobbyist whose client lists include banks, private equity firms, and defense contractors.” It also described him as “a Washington DC insider.”

Coats would become the instant frontrunner in a May 4 Republican primary that already has four candidates, including former Rep. John Hostettler and state Sen. Marlin Stutzman.

Coats has about two weeks to collect the signatures of 4,500 Indiana voters, including at least 500 in each of the state’s nine Congressional districts.

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