Goldsmith Gives Up Effort to Bypass State Regulators

Sir James Goldsmith on Thursday gave up his attempt to bypass the state regulatory approvals required in his hostile takeover bid for Britain’s BAT Industries and its insurance subsidiary, Farmers Group.

So far, Goldsmith’s argument--that the proposed takeover of BAT, valued at nearly $22 billion, is an international affair beyond the jurisdiction of individual states--has been rejected by federal courts in seven of the nine states involved. State insurance commissioners must approve any change in ownership of insurers headquartered within their borders, and Los Angeles-based Farmers has insurance subsidiaries in those states, including California.

Goldsmith, chairman of Hoylake Investments, which is making the hostile takeover bid for BAT, has been urged repeatedly by Hoylake’s French partner not to seek to circumvent state laws. The partner, Axa Midi Assurances of Paris, has sought to cooperate with state officials, some of whom have already scheduled hearing dates.

Hoylake decided to withdraw its federal lawsuits, Goldsmith said, after Claude Bebear, Axa Midi chairman, pointed out that it was his company that would have “to work and live with each of the nine state insurance commissioners, and he (Bebear) did not want to begin that relationship in court.”