Primerica, Travelers talk merger Weill orchestrates $5 billion stock swap

September 23, 1993|By Ian Johnson | Ian Johnson,New York Bureau

NEW YORK -- In a move that could cap Sandy Weill's power drive back to the top of the financial serv- ices industry, Primerica Corp. said yesterday that it is negotiating a $5 billion merger with The Travelers Corp.

The move would involve a swap of stock between Sanford I. Weill's Primerica and The Travelers, one of the nation's largest insurance and financial management companies and also owner the Dillon, Read & Co. investment firm. The new company would keep the better-known name of The Travelers, have annual sales of $6 billion and offer services ranging from selling stock to insuring homes. Primerica originally took a 27 percent stake in The Travelers last year, leading analysts to predict that if Mr. Weill liked the company's prospects, he would buy a controlling interest in it. The Travelers is considered a good buy be- cause it is seen as fundamentally sound but, like other insurance companies, suffering from the effects of bad real estate deals and recent natural disasters.

"Travelers has a spotted history of earnings, but Primerica is a very savvy money manager. They can get this company very cheap, so it's a great deal for them," said Joan T. Goodman, an analyst with Pershing & Co."

Wall Street seemed to agree with the assessment. Primerica shares rose $1.375, to close at $47.375,while Travelers gained 62.5 cents, to $36.625.

As a bonus, Mr. Weill will get The Travelers' nationally known name, which would add the name recognition that his company has lacked, despite a series of acquisitions that has made it a premier force on Wall Street.

Earlier this year, for example, Primerica bought the Shearson brokerage house to create the second-biggest U.S. brokerage behind Merrill Lynch & Co.

Mr. Weill's new career started in 1986 when he took command of the Commercial Credit Group, a Baltimore-based company that specializes in making loans to people with higher credit risks. He merged Commercial Credit with Primerica in 1988.

NB Formerly, he ran Wall Street's Shearson Loeb Rhoades, which he

sold to American Express Co. in 1981. After reported clashes with the managers of American Express, Mr. Weill left to do charity work before taking over Commercial Credit.

Although the details of the new deal are still being negotiated, Primerica said it probably would involve a swap of Primerica and Travelers stock. Primerica said 0.80423 Primerica shares would be exchanged for each share of Travelers.

Each Travelers share would reportedly be valued at $37 a share, making the total deal worth $5.4 billion.

While declining to comment on progress in the negotiations, a Primerica spokeswoman said, "when the decimal points get that far along, the deal must be pretty close to consummation."

PRIMERICA CORP.

(

Main lines of business

A financial holding company engaged in consumer finance, insurance, investment and corporate finance services.

Headquarters: .. .. .. .. .. .. New York

Employees: .. .. .. .. .. .. .. 36,000

Chief executive officer: .. .. Sanford I. Weill

Stock

Exchange .. .. .. .. .. .. .. .. .. NYSE

Trading symbol .. .. .. .. .. .. .. ..PA

Shares outstanding .. .. .. .. ..168.7 million

Closing stock price

Yesterday .. .. .. .. .. .. .. .. 47 3/8 .. .. .. +1 3/8

52-week range .. .. .. .. .. .. ..$20 5/8 .. .. ..$48

Financial information

Second quarter ended June 30

.. .. .. .. .. .. .. 1993 .. .. .. .. .. 1992

Revenues .. .. .. .. $1.3 billion .. .. ..$1.3 billion

Net income .. .. .. 180 million .. .. .. $150 million

Earns./share .. .. .. .. $1.02 .. .. .. .. .. $0.90

1992 fiscal year

Revenues .. .. .. .. .. .. .. .. .. .. $5.1 billion

Net income .. .. .. .. .. .. .. .. .. $716 million

Earns./share .. .. .. .. .. .. .. .. . $3.34

TRAVELERS CORP.

(

Main lines of business

Provides group and individual life insurance, health care services, accident and health insurance and workers' compensation. 6Headquarters: .. .. .. .. .. .. .. .. Hartford, Conn.

Employees: .. .. .. .. .. .. .. .. .. .. .. .. 32,000

Chief executive officer: .. .. .. .. .. .. Edward H. Budd

Stock

Exchange .. .. .. .. .. .. .. .. .. .. .. .. .. NYSE

Trading symbol .. .. .. .. .. .. .. .. .. .. .. TIC

Shares outstanding .. .. .. .. .. .. .. .. .. ..145.5 million

Closing stock price

Yesterday .. .. .. .. .. .. .. .. .. .. .. 36 5/8 .. .. .. .. + 5/8

52-week range .. .. .. .. .. .. .. .. .. .. $17.125 .. .. ..$34.75

Financial information

Second quarter (ended June 30)

.. .. .. .. .. .. .. .. .. .. .. .. 1993 .. .. .. .. .. 1992

Revenues .. .. .. .. .. .. .. .. .. $2.5 billion .. .. $2.6 billion

Net income .. .. .. .. .. .. .. .. $93 million .. .. $66 million

Earns./share .. .. .. .. .. .. .. .. $0.55 .. .. .. .. .. $0.59

1992 fiscal year

Revenues .. .. .. .. .. .. .. .. .. .. .. .. $9.7 billion

Net income .. .. .. .. .. .. .. .. .. .. .. ($695 million)

Earns./share .. .. .. .. .. .. .. .. .. .. .. .. ($8.11)

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