Regulators in California, Illinois OK Deal by Batus
Batus Inc.’s $5.2-billion quest for Farmers Group moved significantly closer to completion Monday as regulators in California and Illinois dropped earlier opposition and gave their blessing to the union.
After nearly a year’s courtship--most of it stormy--Farmers last Aug. 24 agreed to Batus’ sweetened offer to pay $75 a share in cash for the Los Angeles-based insurance holding company. The deal thus would edge out General Motors’ $5.1-billion purchase of Hughes Aircraft in 1985 as the state’s biggest ever.
For the record:
12:00 a.m. Oct. 19, 1988 FOR THE RECORD
Los Angeles Times Wednesday October 19, 1988 Home Edition Business Part 4 Page 2 Column 3 Financial Desk 1 inches; 30 words Type of Material: Correction
In a story Tuesday on the acquisition of Farmers Group by Batus Inc., Indiana was incorrectly listed as one of five states where regulators have approved the $5.2-billion merger. The list should have included Idaho.
So far, insurance regulators in five of the nine states in which Farmers’ insurance subsidiaries maintain headquarters have approved the change in ownership.
California Insurance Commissioner Roxani M. Gillespie initially rejected the deal on technical grounds, but her ruling was overturned in state court. Without comment, Gillespie deputy Norris W. Clark notified the companies Monday that their application, as amended since the merger agreement, “is hereby approved.”
Illinois Insurance Director John Washburn earlier had raised a number of points of concern regarding Batus’ plans for Farmers. These included whether Louisville, Ky.-based Batus, a major manufacturer and marketer of cigarettes, would continue Farmers’ discounts for nonsmoking insurance customers.
In his statement, Washburn said he “is satisfied” with the terms of the agreement. These included a number of guarantees by Batus to maintain the independence of Farmers’ exchanges, the agencies that actually sell and service insurance policies for Farmers Group.
“The agreements between the parties provide adequate protection for the policyholders and the public of this state,” Washburn wrote.
The merger had previously been approved by regulators in Arizona, Washington and Indiana. Yet to be heard from are Oregon, which earlier had opposed the merger; Ohio, which had approved it, and Texas and Kansas, which have held hearings but issued no decisions.
Farmers’ shareholders must also give approval for the merger, but no date has yet been set for a meeting. However, spokesman Jeffrey C. Beyer said, both sides intend to complete the deal by year-end.
Batus, a U.S. subsidiary of London-based BAT Industries, made its first friendly overture to Farmers in September, 1987. But it was not until last Jan. 12 that it offered to buy the company for $60 a share, a bid that it boosted to $63 on March 3. Farmers’ common stock had traded for about $43 a share at the time of the first offer. It closed unchanged Monday at $71.50 a share in over-the-counter trading.
