Primerica Seeking to Buy Shearson : Securities: If talks succeed, the deal would create a company that would rival Merrill Lynch as the nation’s biggest brokerage.

NEW YORK —  Primerica Corp.--headed by Sanford I. Weill, one of Wall Street’s most prolific deal makers--is negotiating to acquire the brokerage business of American Express’ Shearson Lehman Bros., the companies said Tuesday.

The deal--which would combine Primerica’s Smith Barney, Harris Upham subsidiary with Shearson’s domestic retail brokerage and asset-management business--would create a Wall Street powerhouse with 11,400 brokers and nearly 500 branches.

The new company would rival Merrill Lynch as the nation’s biggest securities firm.

American Express and Primerica confirmed the talks Tuesday after a Wall Street Journal report that the two were discussing a combination for a proposed price of about $1 billion. Neither company gave a value for the proposed deal.

American Express spokeswoman Susan Miller said the talks do not involve American Express’ Lehman Bros. investment banking unit or retail brokerages that operate under the Lehman name.

For the 49-year-old Weill, now Primerica’s chairman and chief executive, concluding the sale would be a sweet triumph. He was the architect of Shearson Loeb Rhoades during the 1960s and 1970s, when he cobbled together takeovers of 15 small securities firms failing from effects of a prolonged Wall Street slump.

He sold Shearson to American Express in 1981 for the then-record sum of $930 million, and became president of American Express under then-Chairman James D. Robinson III.

But Weill was unhappy as No. 2 and resigned in 1985. Later that year, he tried a takeover bid for BankAmerica, but was rudely rebuffed. He later failed in an attempt to acquire E.F. Hutton.

Still on the prowl, Weill in 1986 purchased Commercial Credit from Control Data, providing him a foothold in the financial service business. Two years later Weill acquired Primerica, an insurance company that owned Smith Barney, the vehicle by which Weill planned to re-establish his name on Wall Street.

Business associates believe that Weill’s intent is to establish a financial services powerhouse that rivals American Express. His strategy is to grow Smith Barney, as he did Shearson, through takeovers. He has articulated a goal of adding a minimum of 1,000 brokers to the firm.

To that end, in late 1989, Smith Barney acquired 16 retail offices from Drexel Burnham Lambert. In 1990, Primerica made a bid for Shearson, but the talks collapsed. Discussions last May to acquire General Electric’s Kidder Peabody brokerage unit also failed.

Thus a successful conclusion this week will move Weill much closer to his goal. He and Frank G. Zarb, Smith Barney’s chairman and chief executive, figure to try to restore Shearson’s former luster, which was tarnished under American Express management.

Analysts have criticized Robinson for creating turmoil at Shearson when he purchased the ailing E.F. Hutton shortly after the 1987 stock market crash and tried to integrate it with Shearson.

Shearson lost $116 million last year on revenue of $2.93 billion, while its competitors earned record profits. Primerica earned $728 million in 1992, up 52% from the year before, on revenue of $5 billion.

Securities analysts who follow Primerica approve the proposed combination.

“This is a great opportunity for Primerica,” said Joan Goodman, vice president of Pershing Co. in Chicago. “The company has the best management team for a brokerage house in the country in Sandy Weill, President James Dimon and Frank Zarb. They are three very strong, hands-on managers who’ve been in the business a long time.”

Goodman pointed out that the acquisition would expand Primerica’s sales force significantly, allowing it to sell other products such as insurance, mutual funds and custody and trust services.

“For both companies, this is a win-win deal,” she said.

The stock market also showed its approval. Primerica stock jumped $4.75 per share to close at $44.75, while American Express rose $1.25 per share to end at $28, both in New York Stock Exchange trading.

The talks come at a time of great upheaval at American Express. Robinson resigned in January amid pressure from stockholders and directors and was replaced by Harvey Golub.

A sale of Shearson would be the second major move in a week by American Express to shed assets. The travel and financial services company announced last week that it plans to raise as much as $1.2 billion by selling more than half of its 54% stake in First Data Corp., its credit card processing arm.