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Citigroup execs excited
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April 7, 1998: 8:24 p.m. ET
Weill, Reed say merger will likely set standard for financial services
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NEW YORK (CNNfn) - Travelers Group Inc. and Citicorp on Monday shocked the financial world with news of a $70 billion marriage that will create the world's largest financial services company.
Following the merger, each company's shareholders will own 50 percent of the combined company which will have $700 billion in assets, 100 million customers in 100 countries and net revenues of almost $50 billion.
Now that the news has sunk in, Sanford Weill and John Reed, the two executives who sculpted the Travelers-Citicorp merger, say they are looking forward to the challenges that lie ahead.
Appearing on "Moneyline With Lou Dobbs" in their first television interview since the deal was announced, both said the challenges include transforming themselves from clear leaders to roles in which they will share a broad range of responsibilities as co-chief executive officers.
"Clearly, it's not the perfect way to run a company. But when I talked to my key guys, we talked about how we would work together and how reporting to us would mean dealing with two people.
"I'm persuaded it can work. Our sense is it's well worth doing," said Reed, now chairman of Citicorp.
"I think we both have confidence in our own abilities. We've been around for a long time and accomplished a lot. I think we can accomplish the most by sharing leadership. We can do that and accomplish much more than alone," said Weill, chief executive officer of Travelers.
Both said the most intriguing part of the deal is the opportunity to increase the global importance of two already very familiar companies.
"We were thinking what would be the most important structure for Travelers as we position ourselves for the next millennium. Citicorp's name always came up. They have offices in 100 different countries dealing with the rising middle class in those countries. We thought they would be a good partner in merging our products," Weill said.
"We will end up with about $30 billion in revenue from the consumer side which compares to Proctor & Gamble's $36 [billion]. We will also end up with $20 billion on the corporate side.
"I think it's a transformation in terms of the U.S. and the industry. It will give us the opportunity to take it globally," Reed said.
The deal is subject to regulatory approval, although current rules would allow the combined company to retain all its businesses for two years and possibly getting extensions to keep the organization in tact for another three years after that.
Reed is optimistic that regulators will view the marriage positively and give it their blessing, hopefully for a closing in the third quarter. (349K WAV) or (349K AIFF)
Weill said initial reaction has already been positive.
"We felt great about the reaction from the Fed and both sides of the aisle in Congress. We think this is the way financial services are going and that we are creating the leading financial services company in the world," he said.
But other companies will almost certainly be close on their heels as they too seek merger partners.
On Tuesday, two other sizable deals were announced as Household International Inc. agreed to acquire Beneficial Corp. for $8.6 billion in stock and Conseco Inc. and Green Tree Financial Corp. detailed plans to merge in a stock swap worth approximately $7.6 billion. 
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Citicorp
Travelers
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