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ravelers Group Inc. and Citicorp said Monday they plan to merge in a deal worth $70 billion, forming a new company to be known as Citigroup Inc. that would be the number one financial services company in the world.
The new company would have assets of almost $700 billion, yearly revenues of about $50 billion and operating income of approximately $7.5 billion. It would have 100 million customers in 100 countries.

With the merger, Citigroup would vault to the number one financial services position, topping Bank of Tokyo-Mitsubishi Bank Ltd. The deal does face regulatory hurdles.

Travelers chief executive office Sanford Weill proclaimed himself “nervous but excited” about the prospect of managing such a huge firm when he appeared at a New York press conference Monday.

Such nervousness didn’t prevent Weill from asserting that he was creating “a model of the financial services company of the future.” (191K WAV) or (AIFF)

The merged company’s main thrust will be to create one-stop financial shopping for consumers, offering Citicorp’s strengths of traditional banking, consumer finance, credit cards, along with insurance and brokerage services from Travelers and its units.

Following the merger, each company’s shareholders will own 50 percent of the combined company.
The deal would be accomplished through a stock swap through which Citicorp shareholders will get 2.5 shares in Citigroup for each of their Citicorp shares (CCI). Travelers holders will exchange their shares on a one-for-one basis. (TRV).

The deal values each company at about $70 billion.

John S. Reed, chief executive of Citicorp, and Weill of Travelers will serve as co-chairmen and co-CEOs of Citigroup.
The two, who have known each other for 30 years, were all smiles as they appeared before reports but Citicorp’s Reed acknowledged that splitting the top job could present problems.

“Two people sharing a job is inherently difficult,” said Reed, who joked that the two would be measuring each others offices to make sure they’re identical.

“I’ll have to change and he’ll probably have to change a little bit too. We understand those kinds of human difficulties,” he said, adding he felt these adjustments would be minimal.

Travelers is a New York-based financial services firm whose companies include Salomon Smith Barney, Travelers Life & Annuity and Primerica Financial Services. The new company will retain Travelers’ familiar red umbrella as part of its logo.

The deal is expected to close sometime during the third quarter of 1998.

More : money.cnn.com

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