TOBACCO, FINANCES TO BE BAT FOCUS IN DEFENSIVE MOVE

TOBACCO, FINANCES TO BE BAT FOCUS IN DEFENSIVE MOVE

In a restructuring move aimed at fending off a hostile takeover, BAT Industries PLC plans to focus on tobacco and financial services, including its formidable Farmers Insurance Group Inc. of Los Angeles, company officials said Thursday.

BAT has put its U.S. retail chains on the block as part of a defensive strategy against a $21 billion hostile bid from Hoylake Investments Ltd., an investor group led by British-French financier Sir James Goldsmith.BAT officials on Wednesday said they might favor management bids for the U.S. retailers, including the Saks Fifth Avenue and Marshall Field & Co. chains, but not at stockholders' expense.

In addition to selling the retailers, BAT will float its big paper interests as a new company later this year.

"This (restructuring) gives shareholders a better value than some of the alternatives," such as the Hoylake bid, said Christopher Meakin, a BAT spokesman.

However, the restructuring has not deterred Hoylake's interest in acquiring BAT, said a Hoylake spokesman.

The Hoylake bid has been suspended while U.S. state insurance regulators review the effect a change of ownership would have on Farmers.

Patrick Sheehy, BAT's chairman, said at a news conference that he had received a first round of offers for Saks Fifth Avenue, which operates 46 stores, and Marshall Field, with 23 stores, and that he expects to announce the winning bids by the end of April.

Mr. Sheehy said he also expects to announce the successful bidders for BAT's other U.S. retailers, Breuners and Ivey's, in the next couple of weeks.

Breuners operates 61 furniture and home furnishings stores on the West Coast and Ivey's has 23 department stores in the Carolinas and Florida.

Management of all four chains have proposed buying their companies, and ''if all things were equal we would favor a management bid," Mr. Sheehy said. He cited continuity and concern for the retailers' communities as the reasons.

In a statement issued after the news conference, Mr. Sheehy said: "BAT welcomes these management initiatives, but its primary obligation must be to shareholders."

The company also posted a 38 percent jump in its 1989 net profit, boosted by record earnings from the group's tobacco interests and a near doubling of earnings at its financial services division. (See the Journal of Commerce, Thursday, March 22, page 9A.)

Mr. Sheehy described the results as excellent in light of the ''distractions forced on us by Hoylake."

"The performance from financial services and tobacco is particularly significant because they are the businesses which will dominate the continuing group in the future," Mr. Sheehy said.