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Non-Tech : Conseco Insurance (CNO) -- Ignore unavailable to you. Want to Upgrade?

To: Adam Nash who wrote (682)	4/7/1998 9:31:00 PM
From: Ken Sammut	Read Replies (1) \| Respond to of 4155

Maybe the deal will not go through? ------------------------------------------------------------------------ Tuesday April 7, 8:43 pm Eastern Time FOCUS-Conseco to buy Green Tree for $7.6 billion (Changes dateline; updates with quotes, analysis) By Marguerite Nugent CHICAGO, April 7 (Reuters) - Health and life insurer Conseco Inc. (CNC - news) has agreed to acquire Green Tree Financial Corp. (GNT - news) in a stock swap valued at $7.6 billion, the companies said on Tuesday. The agreement, approved by directors of both firms, will create a life, health and consumer finance company with a market capitalization of $20 billion, the companies said. Green Tree, a consumer and commercial finance company that makes mortgages and loans for such things as home improvements and manufactured homes, will operate as a subsidiary of Conseco, the companies said. The agreement is the second union of insurance and finance companies in two days. Citicorp, the nation's No. 2 bank holding company, and Travelers Corp., a leading financial services and insurance concern, announced a merger agreement valued at $83.6 billion on Monday. ''The financial services industry is converging rapidly, as recent events make abundantly clear,'' Conseco Chairman, President and Chief Executive Stephen C. Hilbert said. ''Our acquisition of Green Tree will make Conseco a leading provider of insurance and financial services. ''It strengthens Conseco's 'middle America' consumer franchise, expands our distribution capabilities and provides extensive cross-marketing opportunities under the umbrella of our emerging national brand,'' Hilbert said. Under the agreement, each Green Tree common share will be converted into 0.9165 share of Conseco common. Green Tree stockholders will own about 38 percent of the combined company. Based on Tuesday's opening prices, each Green Tree share would be worth $48.92. Green Tree stock rallied to end $9.875 higher at $38.875, while Conseco shed $8.625 to finish at $49.125, both on composite New York Stock Exchange trading. ''The market has reacted negatively on the Conseco side and adopted an abnormally wide spread between what the deal is trading at and what it should be trading at,'' said Ed Najarian, an analyst at Wheat First Butcher Singer. He said the spread suggests an above-normal expectation that the deal may not close. Analysts said there was concern about some accounting practices Green Tree uses for its securitized assets, which involves counting as revenue a cash flow that develops from securitizing an asset. But that revenue may never be realized if market conditions change and prepayments of the underlying asset accelerate. This occurred in the fourth quarter, forcing Green Tree to add $190 million to reserves and resulted in a fourth-quarter loss of $17.3 million. Hilbert tried to allay investors' fears by saying more conservative practices are being adopted, but his words failed to bolster the stock. One analyst, who asked not to be named, said, ''If the accounting system changes, then earnings will go down as well.'' Headquartered in Carmel, Ind., Conseco has nine million policy holders in partnership with 190,000 independent and career insurance agents across the country. Conseco provides supplemental health insurance, retirement annuities and universal life insurance. Green Tree, which has 6,000 employees at 200 sites nationwide, will continue to operate from its St. Paul, Minn., headquarters as a subsidiary of Conseco. The transaction, which will be accounted for as a pooling of interests, is expected to be completed in the third quarter, the companies said. In connection with the merger agreement, Green Tree has granted Conseco an option to purchase 26.7 million shares of Green Tree common stock at $52.93 per share.