GE Capital Offers $2.2 Billion for Kemper Corp. : Finance: Board of takeover target opposes bid. Its assets include significant holdings in Southern California.
Bucking a clear signal that its advances are unwelcome, a General Electric Corp. unit said Monday that it has made a $2.2-billion unsolicited offer for Kemper Corp., a giant Illinois-based financial services company.
GE Capital said it might boost its $55-per-share offer after it obtains more information about the real estate holdings of Kemper, a major player in the insurance, mutual fund and brokerage businesses. Kemper’s assets include the Los Angeles brokerage Bateman Eichler, Hill Richards, now part of Kemper Securities, and a significant share of its real estate holdings are in California.
GE said it decided to make the offer public after failing to win support from Kemper’s board in private talks over the last several weeks. Bruce Bunch, a GE spokesman, declined to say if GE would consider a hostile bid if Kemper’s board continues to reject the offer.
“We are focusing our efforts on making it happen by dealing with the board,” Bunch said.
Kemper issued no immediate comment. But a March 4 letter from Kemper Chairman David B. Mathis to GE Chairman John F. Welch, made public by GE, said Kemper firmly opposed the offer.
“We strongly believe that a sale of the company at this time is not in the best interests of our stockholders,” Mathis’ letter said.
The offer for all of Kemper’s stock was announced after the markets closed. In composite trading on the New York Stock Exchange, Kemper closed at $40.875. But in after-hours trading, Kemper shares rocketed $16.125 to $57. GE closed at $105.25, unchanged, and stayed at that price in the after-hours market.
Analysts said GE mainly was attracted to Kemper’s mutual fund business. In addition, Bunch said GE believes it could profitably manage the considerable real estate holdings owned by Kemper’s life insurance unit.
“We have a great deal of experience managing real estate assets,” he said.
The announcement appeared to quell longstanding speculation that GE was considering the sale of its own Wall Street investment bank, Kidder Peabody & Co.
Bunch declined to say how Kidder and Kemper’s brokerage operations might be combined. Kemper Securities is primarily a retail brokerage operation, emphasizing sales to individual investors and small companies, while Kidder has a large corporate finance and investment banking operation.
In a letter Monday to Mathis, Gary C. Wendt, chairman and chief executive of GE Capital Services, said, “We believe that there are clear and compelling advantages from the combination of our two companies.”
Perrin Long, a brokerage industry analyst with First of Michigan Corp., said the offer shows that GE Capital, in conjunction with Kidder, “wants to move more aggressively into the asset management and retail side of the business.”
Long said Kemper’s strong retail presence in strategic markets such as Southern California, Chicago and Cleveland could be a big boost for Kidder. The Long Grove, Ill.-based firm had put its securities subsidiary up for sale last June but took it off the block after failing to receive what it considered suitable offers.
In January, Kemper exited the property and casualty insurance business, completing the sale of its Federal Kemper Insurance unit for $100 million to Anthem P&C; Holdings Inc.
Kemper reported net income for 1993 of $87.5 million, or $2.47 a share, including discontinued operations, contrasted with a net loss for 1992 of $198.2 million, or $4.02 per share.
