June 1 1990 by Peter Lacey
Claude Bebear launched what could have become the biggest ever French business acquisition in the U.S. In July 1989, Bebear, chairman and CEO of Paris-based Axa Midi Assurances, was offered the Los Angeles-based Farmers Group for $4.5 billion.
Bebear has been rapidly internationalizing France‘s third-largest insurance company. America, with 40 percent of the world market, was beckoning. Now Axa Midi, with a potential war chest of $7 billion, is still looking.
The problem was that the man who offered Farmers to Bebear, Sir James Goldsmith, never got to own it. California insurance regulators first denied the proposed sale, saying the deal to sell Farmers to Axa Midi relied too heavily on borrowing. Then Goldsmith’s investment company, Hoylake, withdrew its $21 billion takeover bid for the British American Tobacco (BAT) conglomerate, the actual owner of Farmers.
Bebear, 54, a graduate of Paris‘ elite Ecole Poly-technique, was trained as an actuary and is determined to limit Axa Midi to insurance-related financial services. Goldsmith’s motives may be purely mercenary, but Bebear claims to be impelled by market forces. Still AxaMidi did put $1 billion into Goldsmith’s own war chest. “The insurance world is completely changing,” he says. “Up to now it was only domestic, but more and more the big companies want to be international. The EC will be 25 percent of the world market. To exist at the turn of the century, you must be big and international.”
In his six years as CEO, Bebear has expanded the company throughout Europe, increasing its revenue 70 times (to $6.6 billion in 1988), and its profitimes (to $340 million). Axa’s international business now furnishes one-third of its revenues; Bebear wants it to be more than 50 percent. Acquiring the $6 billion Farmers would have given Axa a large foothold in the U.S., making it the fifteenth largest insurer in the world. Now that the fight is over, Bebear’s claim, “If we don’t get Farmers, we’ll try another American company. I prefer a friendly takeover-it’s less expensive,” takes on new meaning.