SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549-1004
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) June 26, 1994
KEMPER CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
Delaware 1-10242 36-6169781
(State or other (Commission File Number) (I.R.S. Employer
jurisdiction of Identification Number)
incorporation or
organization)
</TABLE>
<TABLE>
<S> <C>
One Kemper Drive 60049
Long Grove, Illinois (Zip Code)
(Address or principle
executive offices)
</TABLE>
Registrant's telephone number, including area code (708) 320-4700
Exhibit Index on Page 5
1
Item 5. Other Events
Kemper Corporation, a Delaware corporation ("Kemper"), Conseco, Inc., an
Indiana corporation ("Conseco"), and KC Acquisition, Inc., a Delaware
corporation and a wholly-owned subsidiary of Conseco ("Acquisition"), have
entered into an Agreement and Plan of Merger dated as of June 26, 1994 (the
"Merger Agreement"), pursuant to which Acquisition will be merged with and
into Kemper (the "Merger") in a transaction in which Kemper will be the
surviving corporation (the "Surviving Corporation"). As of the effective
time of the Merger (the "Effective time"), the Surviving Corporation will
be a wholly-owned subsidiary of Conseco.
As of the Effective Time, by virtue of the Merger, each share of common
stock, par value $5.00 per share, of Kemper ("Common Stock") issued and
outstanding immediately prior to the Effective Time (other than shares of
Common Stock that are owned by Kemper or Conseco or any subsidiary thereof
(excluding shares in trust accounts, managed accounts, custodial accounts
and the like that are beneficially owned by third parties as well as shares
held in the ordinary course of business by subsidiaries of Kemper or
Conseco that are insurance companies or broker-dealers) and other than
shares of Common Stock held by stockholders of Kemper who exercise their
appraisal rights) shall be converted into the right to receive (i) $56.00
per share, without interest, and (ii) the fraction (rounded to the nearest
ten-thousandth of a share) of a validly issued, fully paid and
nonassessable share of common stock, without par value, of Conseco
("Conseco Common Stock") determined by dividing $11.00 by the Average Stock
Price. The "Average Stock Price" shall be equal to the average of the
closing prices of Conseco Common Stock on the New York Stock Exchange
Composite Transactions Reporting System, as reported in The Wall Street
Journal, for the 20 trading days immediately preceding the second trading
day prior to the Effective Time (the "Trading Average"); provided, however,
that if the Trading Average is less than $45.50, then the Average Stock
Price shall be $45.50, and if the Trading Average is greater than $55.00,
then the Average Stock Price shall be $55.50.
Each share of (i) Series A Cumulative Convertible Preferred Stock of
Kemper, (ii) Series C Cumulative Preferred Stock of Kemper, (iii) Series D
Index Exchangeable Preferred Stock of Kemper and (iv) Series E Cumulative
Convertible Preferred Stock of Kemper issued and outstanding immediately
prior to the Effective Time (other than shares held by preferred
stockholders of Kemper who exercise their appraisal rights) will remain
outstanding as one validly issued, fully paid and nonassessable share of
preferred stock of the Surviving Corporation subsequent to the Effective
Time, subject to the respective terms and covenants thereof.
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The closing of the Merger is subject to certain conditions set forth in the
Merger Agreement, including the approval of the Merger by the affirmative
vote of stockholders of Kemper entitled to cast at least a majority of the
votes which all stockholders of Kemper are entitled to cast thereon, the
approval of the issuance of shares of Conseco Common Stock in the Merger by
the affirmative vote of the holders of a majority of the shares present, or
represented, and entitled to vote thereon at a meeting of stockholders of
Conseco, the receipt of all required governmental and regulatory consents,
the receipt of certain approvals with respect to the registered investment
companies for which Kemper or any of its subsidiaries acts as investment
advisor or sub-advisor, the receipt of certain consents from the
noninvestment company advisory clients of the asset management subsidiaries
of Kemper and the obtaining by Conseco of all financing necessary to pay
the aggregate cash consideration payable in connection with the Merger.
In addition, prior to July 6, 1994, under certain circumstances, the board
of directors of Kemper may terminate the Merger Agreement and accept a
proposal made by another party, upon payment to Conseco of $25 million and
reimbursement of its documented out-of-pocket fees and expenses; provided,
that prior to July 6, 1994, such fees and expenses may not exceed $15
million. Thereafter, if Kemper receives a proposal from another party,
Kemper may, under certain circumstances, terminate the Merger Agreement
upon payment to Conseco of $100 million and reimbursement of its documented
out-of-pocket fees and expenses.
Prior to the Effective Time, Conseco Capital Partners II, L.P., an
affiliate of Conseco ("CCP II"), will organize CCP II Holdings Corp., a
Delaware corporation ("CCP II Holdings"), to acquire an existing life
insurance company ("Life Insurance Holdings") and to organize one or more
real estate acquisition subsidiaries. Simultaneously with or immediately
following the Effective Time, it is anticipated that the Surviving
Corporation will sell all of the issued and outstanding shares of capital
stock of each of the subsidiaries of Kemper engaged in the life insurance
business and activities related thereto to Life Insurance Holdings and each
of the subsidiaries of Kemper engaged in holding interests in real estate
businesses and activities related thereto will be merged with and into one
or more of the real estate acquisition subsidiaries. In addition, it is
anticipated that simultaneously with or immediately following the Effective
Time, Kemper Financial Services, Inc., a Delaware corporation ("KFS"), will
transfer all of the broker-dealer businesses of KFS and all of the property
and assets related thereto into a new wholly-owned subsidiary of KFS.
A copy of the joint press release of Kemper and Conseco, dated June 27,
1994, relating to the above-described transactions is attached hereto as
Exhibit 99 and is incorporated herein by reference.
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Item 7. Financial Statement and Exhibits
(b) Exhibits.
99 - Joint Press Release by Kemper and Conseco dated June 27,
1994.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
KEMPER CORPORATION
By: /s/KATHLEEN A. GALLICHIO
--------------------------
Kathleen A. Gallichio
Senior Vice President,
General Counsel and
Corporate Secretary
July 1, 1994
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INDEX TO DOCUMENTS
Sequentially
Exhibit Number Numbered Page
99 - Joint Press Release 6
of Kemper and Conseco
dated June 27, 1994
5
EXHIBIT 99
FOR IMMEDIATE RELEASE
June 27, 1994
FOR MORE INFORMATION:
For Kemper Corporation:
Steve Radis Elliot Schrage/Davis Weinstock
Kemper Corporation Clark & Weinstock
(708) 320-5552 (212) 953-2550
For Conseco, Inc.:
James W. Rosensteele Joele Frank/Ann Hance
Vice President, Investor Relations Abernathy/MacGregor/Scanlon
Conseco, Inc. (212) 371-5999
(317) 573-2893
KEMPER AND CONSECO SIGN DEFINITIVE MERGER AGREEMENT;
CONSECO TO PURCHASE ALL KEMPER SHARES
FOR $67.00 IN CASH AND STOCK
LONG GROVE, ILLINOIS and CARMEL, INDIANA (June 27, 1994) -- Kemper
Corporation (NYSE:KEM) and Conseco, Inc. (NYSE:CNC) today jointly announced
that they have signed a definitive merger agreement providing for all
Kemper shareholders to receive $67 in a combination of cash and stock
for each of their shares. Under the merger agreement, a wholly owned
subsidiary of Conseco will be merged into Kemper. It is contemplated that
the combined entity would operate under the Kemper name.
In the merger, each of the issued and outstanding shares of Kemper common
stock would be converted into the right to receive $56.00 in cash and a
fraction of a share of Conseco common stock determined by dividing $11.00
by the average closing price of Conseco common stock prior to the merger
(such fraction to be not more than 0.2418 nor less than 0.1982).
Based on Conseco's closing price on Friday, June 24, 1994, the total
consideration would be $67.00 per Kemper share, and the total value of the
transaction would be approximately $3.25 billion, based on the number of
fully diluted Kemper shares and existing Kemper long-term debt and
non-convertible preferred stock.
"We are delighted that Kemper and Conseco are coming together to form one
of the leading financial services companies in the United States," said
Stephen C. Hilbert, founder and chairman of the board of Conseco. "We have
a great regard for Dave Mathis and his team and look forward to a smooth
transition in the combination of our two companies."
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"We have a great respect for Conseco and look forward to working with
them," said David B. Mathis, chief executive officer of Kemper Corporation.
"Our board has unanimously concluded that this agreement is in the best
interest of our shareholders."
The merger agreement provides that, prior to July 6, 1994, under certain
circumstances, the board of directors of Kemper may terminate the agreement
and accept a proposal made by another party, upon payment to Conseco of $25
million and reimbursement of its out-of-pocket expenses. Thereafter, if
Kemper receives a proposal from another party, Kemper may terminate the
agreement upon payment to Conseco of $100 million and reimbursement of its
out-of-pocket expenses.
Consummation of the merger is subject to customary terms and conditions,
including approval by the stockholders of Kemper and Conseco, regulatory
approvals and approvals by the boards and shareholders of Kemper's mutual
funds, and to obtaining the required financing.
At the closing, it is contemplated that Conseco Capital Partners II, L.P.
(CCP II), Conseco's life insurance acquisition vehicle, will purchase
Kemper's life insurance and real estate subsidiaries from Conseco.
Conseco and CCP II have obtained a commitment letter from Citibank N.A. to
provide in excess of $1.22 billion of senior secured bank financing for the
transaction. Morgan Stanley & Co. Incorporated has provided Conseco with a
letter stating that it is highly confident that up to $750 million of
subordinated debt financing will be available for the transaction. The
remaining cash required for the merger, approximately $550 million
(including estimated transaction, restructuring and other costs), is to be
provided by Conseco and other existing investors in CCP II.
Upon completion of the transaction, Conseco and CCP II affiliate would have
more than $85 billion in assets under management, total net revenues and
annual collected premiums of $4.2 billion, and 9,000 employees; they would
provide a broad range of financial services to individual and institutional
customers.
Kemper, headquartered in Long Grove, Illinois, is a financial services
holding company with principal operations in asset management, life
insurance and securities brokerage. Kemper has approximately $90 billion
in life insurance in force, and operates one of the ten largest
full-service brokerage firms in the United States. Kemper has the nation's
seventh largest mutual fund family, with $45 billion in assets under
management, and also manages $22 billion in assets for Kemper's life
insurance companies and other institutional customers.
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Conseco, which began operations in 1982, generates earnings from three
primary activities: operating life insurance companies; providing
fee-based services to affiliates and other financial institutions; and
acquiring and restructuring life insurance companies through specially
formed acquisition vehicles.
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