Who would dare defy General Electric in its hot pursuit of Kemper?

A number of big financial-service companies, that's who. "The pot is boiling for Kemper," says one arbitrageur at a major Wall Street investment bank, "because the new bidders include Merrill Lynch, Chubb, and Travelers."

Kemper, which put itself on the block after GE's bid, is expected to set a July 1 deadline for all bidders. And it hopes to announce their names right after July 4, says a corporate insider.

From the way Kemper's stock has been trading, says the arbitrageur, it is clear the Chicago insurance, brokerage, and mutual-fund company has received other bids that well exceed GE's offer of $60 a share. The stock is trading at around 59, which suggests that the offer will simply become the floor price in a bidding war they expect will flare up. A key Kemper attraction, analysts say, is that it's one of the nation's largest investment managers, with assets of $65 billion.

One insider says the July 1 deadline will give the Kemper board a chance to assess the bids before the Aug. 22 annual shareholders' meeting. Kemper's board unanimously turned down an unsolicited GE offer in March to buy the company at $55 a share. GE then raised it to $60. Even so, Kemper's board stayed adamantly against the GE offer. "The market," says one arb, "believes GE will raise the ante to $63 to $65 when it becomes convinced there are other big players in the game."

GOOD CATCH. Michael Lewis, a senior analyst at Dean Witter Reynolds, is also high on Kemper. He believes the takeout price "will be $65 to $70 at least." With Kemper's asset-management, insurance, and mutual-fund operations, Merrill would become an even larger financial-service giant. A Merrill spokesman declined comment.

Chubb is a major insurer that underwrites property, casualty, life, and health insurance. Kemper's insurance, real estate, and mutual-fund businesses would complement Chubb's existing assets. A spokeswoman declined comment. And Travelers, formerly Primerica, which offers insurance, consumer lending, and investment services, would find Kemper's operations a big boost for its sales and earnings. A spokeswoman says the company won't comment on rumors.

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