by Karen E. Culp
MidAmerican Energy, Iowa's largest energy company, April 6 announced that it will purchase a real estate brokerage organization that includes Springfield's Carol Jones, Realtors.
MidAmerican Energy Holdings Company will purchase AmerUs Home Services Inc. The purchase will include real estate companies in five states: Iowa Realty, in Iowa, the state's largest realty firm; First Realty/Better Homes & Gardens in Des Moines, Iowa; Edina Realty, in Minnesota, North Dakota and Wisconsin; and Carol Jones, in Springfield. Company officials estimated that Carol Jones, Realtors, was the third or fourth largest of those agencies.
For Carol Jones, Realtors, it will be "business as usual," said General Manager Bob Fitzgerald. In terms of how the transaction occurred, Fitzgerald said, "we sought them out."
Robert Brooks, chief executive officer of AmerUs, said he was "seeking the company that was the best match for the home services component, and he found it in MidAmerican," Fitzgerald said.
The AmerUs companies are arranged under a mutual holding company, which owns 100 percent of the stock in The AmerUs Group, an umbrella company, Brooks said. The AmerUs Group owns about 50 percent of AmerUs Life Holdings while the public owns the other half.
The AmerUs Group also owns AmerUs Home Services, which it acquired in 1985, and AmerUs Bank and Home Equity Inc., which it acquired in 1988.
Omaha, Neb.-based Commercial Federal Feb. 12 entered into a definitive stock purchase agreement to acquire AmerUs Bank. The deal is set to close in the third quarter of 1998, and will result in the AmerUs Bank's being merged into Commercial Federal Bank. With this announcement, the company is taking itself back to its initial focus, the insurance business, Brooks said.
The real estate companies remain profitable, said Jamie Buelt, spokesperson for Iowa Realty.
"It was a record first quarter for the companies. The real estate market is really good right now. The sale of these companies is more a function of corporate strategy," Buelt said.
The life insurance component of the business has been partially owned by the public for about a year, Brooks said, and that has increased the company's annuities from the $4 billion range to the $11 billion range in only a year's time, he said. Divesting of the banking and real estate business was a matter of focus, he added.
"We're getting back to focusing on our major interests," Brooks said.
About five years ago, the real estate business brought in about one-third of AmerUs' profit; now, it represents less than one-sixth, he said.
"We're growing so fast on the insurance side that it is becoming our primary earner. It isn't that the other businesses weren't doing well; we're just concentrating our efforts," Brooks said.
The company made the decision when it sold the banks to maintain its 15 wholesale lending offices, which will be folded into a new company to be headed by AmerUs Bank's current president, Marcia Hanson.
Brooks said there were four or five other companies that approached AmerUs about acquiring the real estate group. He did not disclose what those companies were, but said that negotiations with Mid-American lasted only about 30 days.
Brooks said the insurance company will look to expand its business in a way that is an advantage geographically the company does not have a strong presence in the New England area, for example or to include products that are aligned with insurance.
The deal is set to close in 30 to 45 days. Carol Jones has 335 agents in its 10 southwest Missouri offices. The company has two subsidiaries: AmerUs Commercial Group in Springfield and Pointe Royale, Realtors, in Branson. Carol Jones, Realtors, was founded by Carol Jones and four agents in Jones' kitchen in 1983. It was sold to Iowa Realty in 1993.
This sale is subject to federal approval by the Department of Justice and the Federal Trade Commission. It is the first foray into the real estate business by Mid-American Energy, which has 647,724 electric customers in Iowa and the immediate border areas of that state, such as around Sioux Falls, S.D., and in Illinois. Ronald W. Stepien, the executive vice president for transmission and energy delivery for Mid-American, said the company was looking forward to deregulation of the electric industry with this purchase.
"This isn't about energy necessarily. ... In the long term there are going to be a lot of alternatives for customers, but I don't think that's something we can see yet. For now, this is an excellent partnership, and we're focusing on the realty partnership," Stepien said.
MidAmerican's current management team is eager to pursue growth on a regional basis, Stepien said. "This management team has been very aggressive in terms of its positive growth strategy," he said.
Area energy companies responded to the announcement by saying that they see deregulation as an opportunity for their own companies. John Twitty of City Utilities said the municipally owned utility is concerned about the whole deregulation process.
"City Utilities feels good about our position in the market. We have looked at our rates and find that they compare very favorably to MidAmerican's in their service territory," Twitty said.
Twitty added that he "expects there will be others," to enter the Springfield market, either with investments now or later, once the state legislature passes an electric-industry restructuring law.
Twitty said that CU officials do not expect the legislature to pass such a law this term.
Amy Bass, director of corporate communications for Empire District Electric, an investor-owned utility with service territory in southwest Missouri, Kansas, Oklahoma and Arkansas, said the company is "preparing to be in a competitive marketplace." Right now, Empire's service territory is "all around the Springfield city limits," Bass said.
"We would be rather foolish if we weren't concerned about what other companies are doing. But we have built very strong relationships with our customers. We even have potential customers in communities that we don't serve saying that when we are able, they want to sign up for our service. We have opportunities to gain customers when restructuring begins," Bass said.
Empire is also beginning to diversify its product line, but has not yet purchased additional companies, Bass said. The company now offers monitored security systems and energy-management systems. MidAmerican also offers home-security, appliance-warranty and home-connection services as part of its product package.
Investor-owned MidAmerican also has 618,007 natural gas customers. CU also sells natural gas to its customers, but Empire does not. The company has recently become involved in the natural gas wholesale business, Bass said.
Carol Jones, Realtors, is still involved in a lawsuit it filed against Murney Associates, the company founded by former Carol Jones agent, Patrick Murney. Carol Jones, Realtors, Aug. 29 filed a six-count lawsuit against Murney Associates Realtors seeking $2 million in actual damages from the company and five defendants who once worked for Carol Jones.
The suit also asks for Murney Associates' first nine months of revenues as damages. Murney left Carol Jones in July of 1997. The lawsuit has a March 1999 court date.
Murney has denied the charges, filing responses and two counterclaims in the suit, one of which has been paid by the plaintiff, said Murney's attorney, Steve Garner. Garner added that he did not know whether the proceedings would be affected by the sale of Carol Jones, Realtors.
An attorney for Carol Jones, Realtors, said the proceedings in the lawsuit will not be affected by the announcement of the sale of Carol Jones, Realtors.
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