Possibility of Merger With CalFed Sends Golden West Stock Soaring : Banking: Investors think such a move would bring greater profits, analysts say. Other suitors are expressing interest.

The stock of Oakland-based Golden West Financial soared $4.50 a share, or 11%, on Friday to close at $43.75 on the New York Stock Exchange--a day after Chairman Herb Sandler met with major shareholders of California Federal Bank to discuss a possible merger.

Golden West’s stock price shot up because investors believe that a merger would greatly benefit World Savings, Golden West’s operating subsidiary, analysts said. Investors believe a merger would result in a larger, more efficient and more profitable financial institution with $44 billion in assets.

While Merrill Lynch raised its rating on Golden West’s stock Friday, Standard & Poor’s put $2.4 billion of Golden West debt securities on its credit watch, suggesting those bonds may have to be downgraded if a merger occurs. Meanwhile, CalFed shares rose, closing up 25 cents at $16.375 on the NYSE.

Analysts said Golden West’s interest may prompt friendly merger offers for CalFed from other suitors. Indeed, CalFed officials said they received numerous expressions of interest from other banks and thrifts Friday.

Those who attended the Thursday meeting in New York said Sandler asked 10 major shareholders, who hold about 50% of CalFed’s stock, to prevail on the board to allow him to examine CalFed’s books so he could decide whether to make a specific offer for CalFed’s shares.

Sandler said he does not plan to mount a hostile tender offer, sources said. He declined to comment Friday.

Sandler’s pitch met with sympathy from several of the investor representatives Thursday. One, who asked not to be identified, said the investors will seek regulatory permission to approach CalFed’s board about opening talks with Golden West.

So far, CalFed has been cool to Golden West’s overtures and has refused to open its books.

In a letter to CalFed’s board last month, Golden West offered to pay $21.50 per share, minus an anticipated fourth-quarter loss and subsequent write-downs on bad assets. CalFed’s board rejected the offer.

Golden West’s offer could work out to $625 million, though sources said the adjustments could lop $50 million or more from the price.

CalFed Chairman Edward Harshfield complained that the offer was not high enough and was subject to unspecified conditions. The thrift has embarked on a recapitalization plan to clean up its bad loans and capital before possibly putting itself up for sale.

If Golden West were allowed to look at the books and then decided to pass on a merger, it could harm CalFed’s plan to raise up to $300 million in a stock and rights offering later this year, sources said.