Broad Inc. to Buy Four Firms for Up to $225 Million

Broad Inc., a Los Angeles-based financial services firm, has agreed to acquire most of the core financial service businesses of Integrated Resources Inc. for up to $225 million.

The deal would allow Broad--formerly Kaufman & Broad but renamed after the company spun off its home-building operations--to further diversify its financial services businesses and increase its total assets under management.

The transaction also would cap months of attempts by Integrated Resources to sell its core businesses to raise money to help meet payments on about $1.75 billion in debt and avoid a bankruptcy court filing.

Broad, which earlier this year moved its administrative headquarters to Los Angeles from Atlanta, said the purchase price for four insurance and investment units of New York-based Integrated Resources is subject to adjustment at closing, based on the units’ financial performance. Broad estimated that, as of Thursday, adjustments would reduce the price to $170 million.

The purchase of the four units--Integrated Resources Life Insurance Co., Integrated Resources Asset Management Corp. Integrated Resources Equity Corp. and Resources Trust Co.--would increase Broad’s portfolio of insurance annuities under management by roughly $2 billion, said Jana Waring Greer, a Broad vice president. It also would bring Broad about $2 billion more in managed assets and add 3,600 independent sales representatives to the 12,000 that the firm already has under contract.

The deal does not include the real estate limited partnership business that Integrated plans to retain, nor the traditional life insurance business, tax sheltered annuity business and United Resources sales network that Integrated previously agreed to sell to other parties.

Thursday’s agreement is subject to regulatory approval and certain other conditions. Iowa’s insurance commissioner has already indicated his opposition to parts of the agreement relating to the speed with which Broad proposes to complete its acquisition of Integrated Resources Life Insurance Co. However, officials of Broad and Integrated say they hope to work out a compromise.

With this latest deal, Broad continues to transform its financial services operation by dropping its traditional life insurance business to focus instead on faster-growing retirement-oriented savings products such as single-premium annuities. Those annuities--which allow investors to accumulate earnings tax deferred until retirement--have been gaining popularity, particularly among middle-aged consumers.

Broad, which sold the last of its traditional life insurance businesses in September to Savers Life Insurance Co., was created when the former Kaufman & Broad renamed itself in March. The home-building operations were spun off into Kaufman & Broad Home, a company formed in 1986 that had been majority owned by Kaufman & Broad.

“The acquisition of these select Integrated operations would be an important step in our strategic plan to increase assets owned or under management to the $15-billion level by the end of 1993,” said Eli Broad, chairman and chief executive of Broad.

In trading on the New York Stock Exchange on Thursday, Broad shares remained unchanged at $10.25, while shares of Integrated Resources fell 12.5 cents to close at $1.125.