CHICAGO -- General Electric Capital Corp. dropped out of the bidding for Kemper Corp. yesterday, citing a $67 a share bid by Conseco Inc.
General Electric, whose attempt at a hostile takeover of Kemper earlier this year set the stage for a possible Kemper sale, said in a press release that "after significant due diligence" it decided not to submit a bid.
Yesterday, Conscoo, an Indianabased financial services holding company with substantial interests in life and health insurance, announced a bid to acquire Kemper for about $3.25 billion.
Conseco has given Kemper until Sunday night to decide whether or not to enter into a merger agreement. If Kernper agrees to the merger, Kemper's board of directors could terminate the agreement prior to July 5 and accept any better offer. However, Kernper then would have to pay Conscoo $30 million and also reimburse Conseco's out-of-pocket expenses.
Stephen C. Hilbert, founder and chairman of Conseco's board of directors, said in a press release that the firm's offer is "the right strategic step."
"Kemper not only meshes well with our existing business mix, it brings us a significant new presence in mutual funds, variable annuities, brokerage and money management activities," Hilbert said.
Steve Radis, a spokesman for Long Grove, Ill.-based Kernper, confirmed that the firm has received Conseco's bid and is considering it. He pointed out that Conseco is one of several companies that has been performing due diligence of Kemper's books. The Conseco bid is the only bid the company has received apart from General Electric's now withdrawn bid, Radis said.
General Electric's original bid in March was for $55 a share, or $2.2 billion. However, Kemper officials rejected it and said they would fight any attempt by General Electric to buy the firm. In May, Kemper officials changed their minds and put the financial services firm up for sale after General Electric raised its bid to $60 a share, or $2.4 billion.
In exchange for the higher offer, Kemper said it would open its books to General Electric and all other potential suitors.
Kemper had postponed its annual shareholders meeting scheduled for May until Aug. 22 to allow General Electric and other potential bidders to conduct due diligence.