Primerica and Travelers: Giant in the Making : Mergers: Sanford Weill is having a go at a largely discredited idea: a supermarket of financial services.

The financial supermarket that sells everything from stocks to bonds to life insurance is very much out of fashion these days, but Wall Street seems willing to make an exception for Sanford Weill.

On Thursday, Weill’s Primerica Corp. said it has agreed to acquire Travelers Corp. for $4.2 billion in stock. The deal would fulfill the legendary brokerage executive’s long-held ambition to build a broad-based powerhouse of financial services.

Most analysts were delighted--not because they expect any synergy between Primerica’s brokerage and consumer finance operations and Travelers’ insurance business, but because they believe in Weill’s ability to generate profits.

In trading Thursday on the New York Stock Exchange, Primerica rose $1 to $48.375 a share, an all-time high. Travelers stock jumped $1.125 to $37.75 a share. The companies had said Wednesday that they were near agreement.

“Weill has a reputation for being able to improve profits, mainly by cutting costs, and there’s a belief that he’s going to do it again,” said Alice Cornish, an insurance industry analyst at Northington Partners of Avon, Conn. “I haven’t heard one person say anything negative about this deal.”

The companies said they expect the deal, which is subject to approval by shareholders of both companies and regulatory agencies, to be completed by the end of the year.

In a statement, Weill said the merger would improve profits immediately and that the combined companies would benefit from more diversified earnings and the “formidable financial strength” of an entity with some $100 billion in assets.

The new company would be named The Travelers and would be headquartered in New York.

Primerica purchased a 27% stake in Travelers last year. This summer, Primerica completed a $1.1-billion acquisition of the Shearson Lehman Bros. stock brokerage to form Smith Barney Shearson, the nation’s second-largest brokerage.

Now Weill, who made his name building Shearson and then selling it to American Express, is set to preside over one of the nation’s dominant financial services firms.

While the idea of selling a broad range of personal finance products under one roof was once popular, the poor performance of several “financial supermarkets,” notably Prudential and American Express, has dulled their appeal.

Smith Barney Shearson would sell Travelers insurance policies, for example, but analysts said this type of “synergy” was of marginal value and wasn’t the impetus behind the deal.

Consumer groups, in fact, are highly skeptical of such efforts. They say customers often don’t get the best deal when they buy several financial products through the same channel.

Current clients of Travelers and Primerica should not notice any significant changes in the short term.

For Travelers, however, the acquisition would mean new resources from which to build new lines of business--notably in life insurance. Travelers is still recovering from severe problems from real estate investments that led to the initial Primerica investment last year.

Travelers is already in the midst of cost cutting that will eliminate 5,000 jobs by next year, and a spokesman said there would be other, immediate cuts as a result of the merger.

Cornish said she expects to see further economizing.

A Weill lieutenant, Robert I. Lipp, would take over as head of Travelers Life Insurance Co., while current Travelers Chairman and CEO Edward H. Budd would be chairman of the Hartford-based insurance operation and remain on the board.

For Weill, who, after leaving American Express, took over Commercial Credit Corp. and then bought Primerica (formerly American Can Co.), the new agglomeration will present the biggest management challenge yet.

Associated Press contributed to this report.