Court Hears Suit to Allow Bid for Farmers

A Los Angeles Superior Court judge held a two-hour hearing Friday but did not rule in a lawsuit stemming from California Insurance Commissioner Roxani M. Gillespie’s decision to turn down Batus Inc.’s hostile takeover bid for Farmers Group.

Batus, the U.S. arm of London-based BAT Industries, is suing Farmers and Gillespie. Batus has asked Judge Kurt J. Lewin to overturn her ruling that the company is ineligible to buy Farmers because various Arab governments and British nationalized industry pension funds own BAT stock. California insurance law bans takeovers of insurers by companies that are owned or controlled by government agencies from outside the state. Gillespie approved the deal on all other issues.

Farmers, a Los Angeles insurance holding company, has filed a parallel complaint that was considered in the same hearing. Farmers argues that the California Insurance Department did not give it enough time during hearings in late May to present objections to Batus’ $4.35-billion bid.

Lewin granted Farmers until the close of business Monday to file a 30-page summary with him of any information that may have become available since the hearings. Batus will then have two days to file a response of similar length. Lewin seemed to indicate--without making any promises--that he may rule by the end of next week; he will be on vacation from Aug. 8 to Aug. 26.

In a related development, the Arizona Department of Insurance turned down Farmers’ request for a rehearing of the department’s June 3 approval of Batus’ bid. Farmers immediately vowed to sue for reversal of the approval.

Farmers stock fell 87.5 cents a share to finish at $54.25 in very heavy over-the-counter trading of just over 1 million shares.