Farmers, Batus Attorneys Stop Talking
Top lawyers for Farmers Group and Batus Inc. said Monday that they are deadlocked and no longer talking in a dispute over a secrecy agreement that Farmers wants as a condition for sharing confidential business information.
Batus, the U.S. arm of a British conglomerate, is engaged in an increasingly bitter battle to take over Farmers, a Los Angeles insurance holding company that is the nation’s third-largest home and auto insurer.
The two sides agree that the secrecy provisions themselves are not the problem. Instead, they have reached an impasse over three so-called standstill provisions in the confidentiality agreement that would prevent Batus from acquiring more shares in Farmers while the agreement is in force.
The top lawyers for Batus and Farmers said they have not spoken since last Wednesday. Andrew E. Bogen, a partner with Gibson, Dunn & Crutcher, the Los Angeles law firm representing Farmers, blamed the breakdown on Batus attorneys not returning phone calls made last Wednesday and Thursday.
“We had a feeling if they wanted to make a deal they would have gotten back. . . . At a certain point in these things, you get a feeling you’re being waltzed around,” he said.
In an interview late Friday afternoon, Farmers Vice President and General Counsel Jason L. Katz also accused Batus of allowing talks to break down and not negotiating sincerely. “I personally think they are just spewing a lot of rhetoric in the media.”
Bidding Against Itself
But George T. Lowy, a partner with Cravath, Swaine & Moore in New York and special counsel to Batus and its parent, BAT Industries of London, vigorously disagreed. He said that another partner had returned a call Thursday morning and that a subsequent press release by Farmers had made further talk pointless.
Batus continues to try to persuade Farmers’ board that Batus’ $63-a-share offer is in good faith and in the best interests of Farmers stockholders, Lowy said. “That’s not for the media, that’s for the board, that’s for everybody, because that’s the truth.”
Farmers’ recent statements that it wants negotiations to proceed, without a confidentiality agreement and without opening its financial books, put Batus in the position of bidding against itself, Lowy said. No other bidder for Farmers has yet emerged. “They won’t talk to us; they want us to talk to them,” he said.
Lowy described and Bogen confirmed the three main sticking points in the dispute. Batus wants Farmers to agree not to grant special stock options, asset-sale agreements or breakup fees to any other bidder. Batus also wants to be free of the standstill provisions if Farmers announces a restructuring or a plan to buy up its own stock. And Batus wants the provisions to expire July 12 in any case, while Farmers wants the provisions to expire up to six months after its board approves any alternative bid.
Exchange Barbs
Lowy said Farmers could approve a succession of alternative bids that would keep the standstill provisions in effect for the entire three-year term of the confidentiality agreement.
“His imagination is working overtime. He never brought that up in our conversations,” Bogen said.
Told of Bogen’s remark, Lowy replied, “I didn’t because I didn’t get to it. I said your thing runs too long, it runs on forever.”
Bogen also charged that the July 12 deadline was meaningless because Batus could not win approval from state regulatory agencies until mid-summer anyway. “He was offering us nothing.”
But Lowy said that Batus expected to obtain the bulk of the needed regulatory approvals in May.
