Farmers Group, a major fire and casualty insurer in California and the West, rejected as inadequate Wednesday a $4.2-billion takeover bid from BAT Industries, the giant British tobacco conglomerate.
The rejection, which was expected, may have set in motion a bidding war for the 60-year-old Los Angeles insurance company. When BAT disclosed its $60-a-share offer a week ago, insurance industry analysts said Farmers might be worth as much as $70 a share.
Farmers' announcement came after the stock market closed on Wednesday. Farmers shares closed at $56, unchanged in over-the-counter trading.
Leo E. Denlea Jr., Farmers' chairman, said BAT's offer wasn't in the best interest of Farmers and its shareholders. He said he was optimistic about future growth at Farmers and believed that it was in the company's best interest to remain independent. He said shareholders have experienced an average 18% return on their investment each year since 1971.
Can Raise Bid
Wilson W. Wyatt, a BAT spokesman, said: "We are disappointed and surprised they have not agreed to sit down and talk with us about our proposals. If they would meet with us, we are sure we could . . . satisfy the concerns they alluded to in their public statement."