Magazine article American Banker

Washington Mutual Calif. Deal May Clear Pooling Hurdle

Magazine article American Banker

Washington Mutual Calif. Deal May Clear Pooling Hurdle

Article excerpt

Serious acquisition talks between Washington Mutual Inc. and American Savings are hinging on a complicated accounting issue that nearly killed the deal months ago but may have been resolved.

Seattle-based Washington Mutual, which has assets of $22.3 billion, wants to use pooling-of-interests accounting to buy Irvine, Calif.-based American Savings, according to well-placed sources.

But the conditions under which a pooling can be executed are very strict. And it isn't clear to many outsiders that Washington Mutual's acquisition of $19.8 billion-asset American could meet those criteria. The California thrift is controlled by Robert M. Bass' Keystone Inc. investment partnership. Poolings are normally prohibited when they involve subsidiaries of holding companies.

Sources close to the talks, who asked not to be named, said that early in the negotiations it appeared that a pooling wouldn't be allowed and that, as a result, Washington Mutual would back out.

But sources added that the parties had since talked with the Securities and Exchange Commission and are confident they would get preapproval for the transaction by using loopholes under which American would be viewed as an independent company in which Mr. Bass, Keystone, and his partners are investors.

The parties to the deal "have confidence it can be done," said a source involved in the talks, who asked not to be named. His comments were echoed by others close to the negotiations.

If the accounting issue is resolved, it would eliminate one big barrier to the merger, which would create a $42 billion-asset thrift. …

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