CHICAGO -- Kemper Corp. management and General Electric Capital Corp. have intensified their battle for control of Kemper a week before the company's annual stockholders' meeting.

With an eye toward the Kemper meeting next Wednesday in Chicago, Kemper chairman and chief executive officer David Mathis yesterday pledged to allow a referendum next year on selling the company if its stock fails to trade at least $65 per share over a certain number of trading days.

Meanwhile, General Electric, which launched a bid in March to buy Kemper for $2.2 billion, or $55 a share, also sent a letter to shareholders and ran full-page advertisements in newspapers yesterday urging shareholders to support General Electric's slate of candidates for the Kemper board.

In a letter to stockholders, Mathis reiterated the current Kemper board's stance that a sale is not in the best interest of stockholders, "particularly not at an inadequate $55 per share price."

He wrote that the board has pledged that if Kemper's common stock fails to trade at $65 or more on at least 10 trading days during at least one period of 20 consecutive trading days between May 3, 1994, and May 25, 1995, a referendum will be held at the company's 1995 stockholders' meeting. The referendum would ask shareholders if the company should be put up for sale "to the then highest bidder," Mathis said.

Due to Kemper's restructuring, Mathis said in the letter, share prices nearly doubled during the 15-month period preceding General Electric's bid and the potential exists for the stock to grow more valuable.

"We believe very strongly that the central issue continues to be this: Will you, Kemper stockholders, be the ones to benefit from Kemper's future potential? Or will [General Electric] reap the benefits you deserve," Mathis wrote.

On Thursday, Kemper released its first-quarter results, which showed operating earnings of $35.5 million or $.87 a share, compared with $10.4 million or $.17 a share during the same period in 1993. Operating earnings for Kemper Securities Inc., the company's brokerage unit that includes its municipal bond operation, were $2.7 million or $.08 a share, compared to $1.4 million or $.03 a share in 1993.

Securities firm analysts viewed Kemper's pledge with skepticism.

"Kemper's counteroffer of the possibility of $65 versus $55 a share is indeed tantalizing, but not a sure bet," said Michael Flanagan, a securities industry analyst at Lipper Analytical Services Inc. Business and market forces could prohibit the stock from rising Flanagan said.

"If [General Electric] backs off altogether, the price of Kemper's stock is going to tank," said Perrin Long, director of equity research at First of Michigan Corp.

A General Electric statement released yesterday in response to Kemper's letter said shareholders will choose between General Electric's offer or will wait and see "what might or might not transpire at some indefinite time in the future."

General Electric's advertisements said that the proposed $55 a share price is almost 40% higher than the 38 3/8 market price of Kemper stock last January and that the offer "provides shareholders with a significant premium."

"Ask yourself: Where would Kemper's stock be without the [General Electric] capital proposal?" the advertisement said.

General Electric also reiterated that a higher per share price could be possible if Kemper would allow a review of its real estate portfolio.

In a letter last Thursday to General Electric president and chief executive officer Gary C. Wendt, Mathis declined the request for a review, saying Kemper has no obligation to allow a due diligence procedure "merely in the hope you might raise your bid to some unspecified level."

Both Long and Flanagan said the recent government bond trading scandal at General Electric's Kidder, Peabody Group Inc. securities unit will not play a major role in the attempted takeover of Kemper.

Kemper shareholders next week will choose between re-electing to Kemper's 13-member board Mathis and three other current directors, or electing four former General Electric officials who will push for the General Electric takeover.

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