Magazine article American Banker

Wash. Mutual Details Bid, Challenging Ahmanson

Magazine article American Banker

Wash. Mutual Details Bid, Challenging Ahmanson

Article excerpt

Washington Mutual Inc. has laid out the details of its merger agreement with Great Western Financial Corp., putting the onus on H.F Ahmanson & Co. to demonstrate to shareholders that its hostile bid is better.

Observers said Ahmanson probably will make a counteroffer in the next few days if it exhausts other attempts to move the market in its favor.

"The ball is in Ahmanson's court," said Campbell Chaney, an analyst with Sandler O'Neill Partners. The spread between the value of the two bids "is wide enough to force a sweetened bid from Ahmanson," he said.

But first, observers said, Ahmanson is likely to pull out all the stops in its criticism of Washington Mutual's filing Thursday with the Securities and Exchange Commission.

In the filing, the Seattle thrift stuck to its claims that it could realize $208 million in cost savings in 1998 and $340 million in 1999, while generating $173 million in pretax revenue next year and $334 million in 1999. What's more, the filing projected 1999 net interest income at $246 million, $77 million higher than earlier estimates.

Washington Mutual also said cost savings would be realized by merging back-office operations, eliminating administrative overhead, and closing a total of 200 branches in California, Washington, and other states. The thrift said it would get $50 million of savings in 1999 from branch closures.

Based on Thursday's closing prices, Washington Mutual's offer is now worth $46.46 for each Great Western share, while Ahmanson's is worth $42.39 per share.

That 4-point difference has remained basically unchanged since Washington Mutual emerged as a white knight March 6, despite Ahmanson's verbal attacks earlier this week on Washington Mutual's offer.

People familiar with Ahmanson's strategy said the Irwindale, Calif. based company does not believe its bid necessarily has to exceed Washington Mutual's, but it does have to get close, at least within $2 or $3 per share. …

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