CHICAGO -- After agreeing to consider a sweetened buyout bid from General Electric Capital Corp., Kemper Corp. officials could be willing to sell the financial services firm in pieces to interested suitors.

Steve Radis, a spokesman for Kemper, said yesterday that the firm has not "ruled out" separately auctioning off its securities unit, mutual fund operations, or other services.

"We will do whatever we need to do to maximize our shareholders' value," Radis said. Kemper's stock closed yesterday at 59 1/8, up 1 5/8, with 1,575,100 shares traded.

Tony Zehnder, a spokesman with General Electric, said that it is too early to determine whether General Electric would consider buying certain units of Kemper, as opposed to the entire corporation. He said that decision would be made after General Electric conducts a complete due diligence on Kemper's books.

Under an agreement announced by the firms on Sunday, Kemper Corp. put itself up for sale after months of resisting General Electric's unsolicited offer. Though it agreed to consider a buyout by General Electric, Kemper did not guarantee General Electric would be the only potential buyer.

To enable buyout negotiations to begin between the firms, General Electric agreed to offer to buy Kemper Corp. for $60 a share, or $2.4 billion, instead of the $55 a share, or $2.2 billion, offer it made in March. In exchange for the higher offer, Kemper said it would open its books to General Electric and all other potential suitors.

Certain Kemper businesses could be spun off to interested suitors, analysts said.

"Banks are looking for mutual funds," said Ira Zuckerman, a vice president and research analyst at SBS Financial Group.

But while Kemper's mutual fund business and its insurance arm could be coveted gems, other divisions could be a tougher sell, such as the company's real estate and brokerage arm, Kemper Securities, Zuckerman said.

"If you sell off the crown jewel, you're left with the rest of it, and GE seems to be willing to take the whole," he said, referring to the mutual fund unit.

The analyst cautioned that a piece-meal sale might net Kemper less than the $60 per share piece that General Electric has offered.

Other analysts agreed, said that Kemper would be better off selling its operations as a whole, rather than in pieces.

Robert Robotti, a managing director of Robotti & Eng, said that a full merger of General Electric and Kemper would create "synergies" that will benefit the combined entity.

He said that Kemper's asset management and annuity operations would be greatly enhanced by General Electric's considerable financial strength. In addition, he said that the consolidation of Kidder Peabody & Co., which is owned by General Electric, and Kemper Securities would likely benefit General Electric. A more efficient, stronger securities firm would put General Electric in a good position whether it decided to keep or sell the combined entity, Robotti said.

Perrin Long, director of equity research at First of Michigan, said that Kemper could face problems selling its brokerage unit, which has a municipal bond operation, because of past problems and a recent downturn in the market. Along similar lines, the price for Kemper's asset management could reflect the slowdown in revenues flowing into mutual funds, Long said.

Radis said that the agreement between General Electric and Kemper Corp. opens the door to other potential bidders for the Long Grove, Ill.-based financial services company. He noted that the company has received several "expressions of interest" from potential suitors, but declined to name them.

Market participants and analysts said that possible buyers also might include New York-based Travelers Inc. A spokeswoman for Travelers declined to comment on the speculation.

Others have ruled out Travelers, formerly known as Primerica Corp., because of other recent purchases such as Shearson Lehman Brothers' retail brokerage unit.

Though Kemper officials agreed to negotiate with General Electric based on the $60 a share offer, they are "hopeful" that they will ultimately receive more after talks are completed, Radis said.

Zehnder declined to comment on whether General Electric would pay more than its $60 offer, noting that his firm is "exactly where it wants to be."

General Electric agreed to pay $60 a share in the aftermath of Kemper's announcement that it would allow a shareholders vote next year on selling the company if its stock fails to trade at least $65 per share over a certain number of days over the next year.

The agreement between the firms postponed Kemper's annual stockholders meeting scheduled for tomorrow until Aug. 22 to allow General Electric and other potential bidders to conduct due diligence on the Kemper's books, according to Radis.

Sharon R. King contributed to this article.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.