For Sandy Weill, The Crowning Glory

Last July, Edward H. Budd, chief executive of Travelers Corp., and Sanford I. Weill, CEO of Primerica Corp., were getting ready to be photographed at Primerica's guest house in Greenwich, Conn. Budd helped Weill straighten his tie. When he got it good and tight around Weill's neck, he said: "Now, I've got you." They both laughed.

It looks as if it's Weill who has Budd now: Primerica is poised to swallow Travelers. On Sept. 22, the two companies announced they were discussing "a possible business merger." Primerica, which last October bought 27% of Travelers, would swap about eight of its shares for each 10 of Travelers. Primerica would thus acquire the remainder of the company--in a transaction valued at $4 billion.

While the new company would keep the Travelers name, there is little doubt on Wall Street about who would be running the show. Neither Travelers nor Primerica is talking, but all bets are that Weill, 60, would serve as chief executive of the combined Travelers and Primerica. Robert I. Lipp, the Primerica vice-chairman responsible for overseeing Primerica's Travelers stake, is expected to get the No.1 job on the Travelers side of the company. Budd, 59, probably will land a senior post at the new company.

CASTOFFS. A Travelers deal would be the crowning accomplishment of Weill's career. He has already shaped Primerica into a money machine--from a grab bag of insurance, brokerage, and consumer-credit castoffs. With the Travelers deal, he will triple Primerica's assets overnight, acquiring in the process a strong franchise and brand name. "It's really a remarkable achievement," says Scott Offen, a portfolio manager at Fidelity Investments, a major Primerica shareholder. "Since he bought Commercial Credit in the mid-1980s, he has built one of the truly distinguished financial institutions in the country."

Weill has already racked up some stunning coups. In March, he announced Primerica would buy Shearson Lehman Brothers Inc. from American Express Co. for $1.2 billion, adding almost 10,000 brokers to Primerica's Smith Barney division. In June, he nabbed Robert F. Greenhill, former president of Morgan Stanley & Co., to head the new Smith Barney Shearson. Add those victories to his initial $723 million stake in Travelers, which has earned a profit of more than $500 million.

It's a safe guess that Weill persuaded Budd to sell him the rest of Travelers. Budd had made some progress in turning earnings around and attacking its $5 billion in sour real estate investments. On Sept. 8., Travelers sold 35 foreclosed properties and 12 underperforming commercial mortgage loans to George Soros' Quantum Realty Trust for $634 million. But the pace may not have been fast enough to satisfy the Primerica managers, who already were taking a hands-on approach to whipping Travelers into shape. "If you really want to turn it around, you have to have control," says one Wall Street source.

STRIPPING ASSETS. Most analysts think both Travelers and Primerica shareholders will be better off with the Primerica team running the show. Weill's strong suit is building shareholder value, and he's well known for stripping acquisitions to their best assets and selling the rest. He encouraged the restructuring that helped nearly double Travelers' stock in the past year, from 19 to 36. If the companies merge, there could well be more--including a sale of some of Travelers' unwieldy portfolio of businesses. "They are very unlikely to keep all of Travelers' businesses," says Francis X. Suozzo, an analyst at S.G. Warburg & Co. Weill may also combine some back-office operations, says Lawrence G. Mayewski, senior vice-president at A.M. Best Co., the insurance rating agency.

Once Travelers and Primerica combine into a more diversified company, analysts expect Weill to squeeze an extra $1.5 billion out of Travelers businesses that are overcapitalized and underperforming. He could then redeploy the capital in more profitable areas, says Weston M. Hicks, an analyst at Sanford C. Bernstein & Co. "The deal is a way to unlock the value in Travelers," he says.

Primerica is expected to issue 85 million new shares to buy Travelers' remaining stock, but analysts aren't worried about dilution. The only concern, says Best's Mayewski, is that in the short term, Travelers' real estate investments could be a drag on Primerica's strong earnings. And it is not clear how Primerica, a consumer financial-services company, and Travelers, an institutional company that has large corporate clients, can work together, says Warburg's Suozzo. But Sandy Weill has a knack for getting results. And the megadeal of his career should be no exception.