Ohio Regulator Objects to Batus’ Offer to Buy Farmers

The Ohio Department of Insurance on Thursday served Batus Inc. and its British parent with a preliminary notice of objection to Batus’ hostile $4.3-billion takeover bid for Farmers Group, a Los Angeles insurance holding firm.

In a three-page letter to Batus, Ohio Insurance Superintendent George Fabe cited a state law that requires foreign-controlled companies buying in-state insurance firms to meet insurer ownership laws in their home country. The state law applies only if the foreign statutes affect Ohio companies trying to buy insurers in the foreign country.

British law requires that controllers of insurers must be “fit and proper” but offers little elaboration on that definition. Fabe said his department was considering whether to declare Batus and its parent, BAT Industries of London, unfit to control two wholly owned Farmers subsidiaries, Ohio State Life Insurance Co. and Farmers Insurance of Columbus. BAT and Batus may request a hearing within one month.

A spokesman at Batus’ headquarters in Louisville, Ky., confirmed that the conglomerate had received the letter and “is confident that it can address any concern that the Ohio Department of Insurance may have.” BAT Industries has already satisfied the British law’s requirements twice, he said, with the acquisitions in 1984 and 1985 of two large British insurers, Eagle Star Holdings and Allied Dunbar Assurance.

In a separate development, Batus extended the expiration date of its $63-a-share bid to May 18 from April 27. The company had previously said it expected to extend the offer periodically as it seeks to obtain necessary approvals from nine state insurance regulatory agencies. California hearings are scheduled for May 23.