Conseco bid for Kemper derails GE

June 24, 1994|By New York Times News Service

Conseco Inc., an upstart life insurer, challenged General Electric Co. to a bidding war for Kemper Corp. yesterday, but GE decided to retreat from the field.

Conseco offered yesterday morning to buy Kemper for $67 a share in cash and stock, or about $3.2 billion, topping General Electric's all-cash offer of $60 a share. By mid-afternoon, General Electric had withdrawn its bid, giving no reason for the move.

General Electric has been frustrated in its efforts to acquire Kemper, a mutual fund and insurance company, since it started the bidding in March at $55 a share. At the time, Kemper said it did not want to sell.

But Kemper's management, under increasing pressure from shareholders after General Electric raised its bid to $60, agreed in early May to put the company up for sale.

Several potential buyers examined Kemper's records, but only Conseco has made an offer. Some banks and insurance companies that looked at Kemper concluded that a price above $60 was unattractive, according to executives who examined Kemper's books.

Conseco gave Kemper's board a deadline of midnight Sunday for accepting its offer of $56 a share in cash and $11 in Conseco stock. Steve Radis, a Kemper spokesman, said the directors would consider the new offer "in due course" but could not say when they would meet.

Shareholders of Kemper have benefited considerably from GE's, and now Conseco's, interest in their company. Kemper's stock, which was trading around $40 a share before the GE offer in March, rose yesterday to a peak of $65 when it appeared there was a chance of a bidding war.

But after General Electric withdrew its offer, Kemper stock subsided to $62.625 on the New York Stock Exchange, up $3.375.

Shares of Conseco rose 50 cents yesterday, to $51, while GE stock also gained 50 cents, to $46.25.

A year ago, before the GE offer, Conseco talked with Kemper management about acquiring the company, but was rebuffed because Kemper officials wanted to bring it back to profitability, Conseco Chairman Stephen C. Hilbert said.

The acquisition is the largest ever attempted by Conseco. The highly profitable company was founded 15 years ago by Mr. Hilbert, a former insurance salesman, who had $10,000 and a plan to acquire poorly performing insurance companies and improve them by cutting costs and improving sales and products.

If Kemper management accepts its offer, Conseco will vault from the ranks of middle-sized insurance companies into the big leagues of the mutual fund business. It also will assume the better-known Kemper name.

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