BIG PAYDAY FOR EVEREN

The proposed sale of Everen Capital Corp. is worth about $45 million to chairman James R. Boris, who engineered the $1.1 billion deal.

That much is fairly clear from Everen’s latest proxy statement. Less discernible is the payback for buyer First Union Corp. The Charlotte, N.C., bank holding company, plowing deeper into non-bank services, says it wants a nationwide distribution pipeline. At 2.6 times book value, the cost is in line with other brokerage buyouts.

“Forget price, forget quality; it’s just build it and we’ll turn it into something,” says Thomas K. Brown, a New York institutional investor noted for his spats with chairman Edward E. Crutchfield over First Union’s strategy.

Everen was built to be sold, and no one — least of all Everen shareholders — faulted Mr. Boris’ strategy.

He waited patiently for the payoff, about 10 times the spinoff value of the former Kemper Corp. unit in 1995. Employees still own 60% after a 1996 public offering. The value of unexercised stock options at yearend 1998 was nearly $90 million, according to Everen’s annual report.

President and chief operating officer Stephen G. McConahey, who is retiring at 56, stands to reap $25 million. Other executive departures, some voluntary, are expected as First Union melds operations and tries to boost its per-broker revenue figure of $356,000 to $400,000.Those retail functions are First Union’s target. The potential overlap with Everen is 2% or 3%, says executive vice president Don McMullen, who heads First Union’s retail brokerage unit.

Paying big premiums for slow-growing commercial banks isn’t Mr. Crutchfield’s preference, especially since securities-related operations now account for about 20% of First Union’s business.

“He’s really excited about growing a capital management business,” says Mr. Brown, managing director at Tiger Management LLC. “So he really needed a nationwide retail distribution system.”

Crain News Service