A group led by Zurich Insurance has agreed to acquire Kemper
Kemper Corp. shares rose 11%, following news that the company has agreed to be acquired by a group led by Zurich Insurance Group of Switzerland for $2 billion.
According to terms of the transaction, Kemper shareholders would receive $47.50 a share in cash and $2 a share in preferred stock. “The Kemper board of directors unanimously concluded that this transaction is in the best interest of our stockholders,” said David Mathis, chairman and chief executive of Kemper. Rolf Hueppi, president and CEO of Zurich, said “the strong franchise of Kemper is a great addition to the Zurich network in the U.S.”
Wall Street appeared satisfied with the price of the Zurich deal, especially considering the company’s difficulties in coming up with a merger partner. “I’m pleasantly surprised,” said stock arbitrager George Kellner. “It’s at the high end of the range of what people were expecting.”
Zurich Insurance is the second-largest property and casualty insurer in Switzerland, and with offices in some 40 countries, is one of the world’s largest insurance companies. The company had over $67 billion in assets as of the end of 1993, and its Zurich-American Insurance is one of the top 20 insurance groups in the U.S.
In fact, Zurich has been increasing its presence in the U.S, including making a bid at the end of ’94 to reorganize Home Holdings Inc.’s Home Insurance Co., a beleaguered New York insurer, and pay public shareholders approximately $75 million.
As a result of the deal, Zurich will have exclusive ownership of the company’s money-management arm and be in charge of 51% of Kemper’s life insurance business. The money-management sector is in charge of over $60 billion in assets.
Last year’s takeover fight proved to be embarrassing not only to Kemper but also to Goldman, Sachs & Co., Kemper’s financial adviser. Following the company’s rebuff of a $60-a-share offer in cash from Triple-A rated GE, Kemper then agreed to a higher offer from Conseco in an attempt to evade GE.
Afterwards, Conseco backed out of its agreement when Kemper’s securities and mutual fund businesses were ravaged by 1994’s increase in interest rates which have slowed the flow of money into mutual funds and drastically reduced stock and bond underwritings.
Zurich Insurance execs have said they think the transaction will be concluded even though they still have to give the company’s books a close examination.
Early May is the target date for a definitive agreement which depends on a full review of the company’s books. The transaction is expected to close in the fourth quarter of 1995.
The Seller: Kemper Corp.
Stock Price: $45.25
52-week range: $65.00-$35.75
Common shares outstanding: 34,201,000+
Common Stock Ownership 6.68 mil. conv. preferred
Controlled by insiders: 1.0%
Institutions bid: 49.5%
The Buyer: Zurich Insurance group
Zurich Insurance Group is a Swiss-based diversified financial services concern. If Zurich’s offer is completed, Zurich will own Kemper’s money-management arm, which manages more than $60 billion in assets, and will be a 51% owner of Kemper’s insurance unit. A financial partnership, Insurance Partners L.P., will own the other 49%.
Copyright Quality Services Company Apr 24, 1995
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