Making good on its promise to take its $2.2 billion hostile bid directly to the shareholders of Kemper Corp., GE Capital Corp. notified the Securities and Exchange Commission yesterday that would seek four seats on Kemper's board.
Only four of Kemper's 11 directors are up for election at the annual meeting, which is scheduled for May 11, so even a victory would not assure GE Capital of a successful deal.
Yet the vote would likely serve as a referendum on the offer, making it unlikely that Kemper's board could continue to refuse to negotiate the company's sale.
Kemper, in a statement last night, said only that it would "respond in due course" to the filing.
GE Capital, the profitable lending subsidiary of General Electric Co., has been trying to acquire Kemper, a financial services company based in the Chicago suburb of Long Grove, Ill., for months -- first through informal meetings with Kemper's management and last week through its cash offer of $55 a share. That constituted a premium of roughly $15 more than the price at which Kemper shares had been trading.
In each case, Kemper's board has unanimously brushed off GE Capital, most recently March 17, when Kemper's chairman and chief executive, David B. Mathis, wrote to John F. Welch Jr., his counterpart at GE, "I would hope now that you would attend to your own business and its independent interests, and allow us the same courtesy."
Such whistling in the dark, whatever impression it has made on the institutional investors and hedge funds that own 70 percent of Kemper's shares, has not deterred GE Capital.
On Sunday, it asked Kemper for a list of shareholders and disclosed that it had bought 100 shares of Kemper last week to obtain the standing to file a proxy. GE Capital also said it wanted to communicate directly with Kemper shareholders "and let them make the determination regarding our proposal."
In announcing that it had filed a preliminary proxy statement with the SEC, GE Capital also noted that Lazard Freres & Co., the investment banking firm that is advising it, holds 637,000 shares of Kemper.
A Lazard spokeswoman said those shares represented "beneficial ownership" of clients' asset management accounts that had been in place for some time.
Kemper stock closed yesterday at $61.75 a share, up 87.5 cents, on the New York Stock Exchange.
GE Capital has suggested that it may be willing to pay more for Kemper if it is allowed a closer look at Kemper's $1.7 billion real estate portfolio. Kemper has taken huge write-downs on the portfolio, slicing more than $222 million from earnings in 1992 and $185 million more last September.
In rejecting the GE Capital offer last Friday, Kemper reminded shareholders of its restructuring last year, steps to improve retained operations and last year's sharply improved financial performance.
GE Capital's four nominees for Kemper's board are John C. Deterding, Jack O. Peiffer, John W. Stanger and Paul W. Van Orden, all former executives of the parent company or the subsidiary.
The acquisition of Kemper's mutual funds and their $31.5 billion of assets would make GE Capital the sixth-largest mutual fund company in the country, after Fidelity, Vanguard, American Funds, Franklin and Putnam.