Ahmanson Seeks Wall St. Support for Thrift Deal
Choosing not to raise its hostile takeover bid for Great Western Financial Corp. on Monday, H.F. Ahmanson & Co. instead hammered away at the competing “white knight” offer by Washington Mutual Inc. in an effort to muster critical support from Wall Street.
In an hourlong presentation before analysts and investors in New York, Ahmanson executives used words such as “cavalier” and “dangerously careless” to describe Washington Mutual’s merger-related financial projections.
Washington Mutual and Great Western disputed Ahmanson’s statements, and initial investor reaction favored Washington Mutual, the Seattle-based thrift that last week challenged Ahmanson for the top spot in the nation’s thrift industry by topping Ahmanson’s unsolicited Feb. 17 proposal to acquire Great Western.
“Ahmanson raised valid points” during its presentation, said E. Gareth Plank, an analyst at UBS Securities in San Francisco. But “based on the share prices,” Plank said, “it looks like Washington Mutual scored the points.”
Ahmanson stock edged up 25 cents Monday to close at $42.375 on the New York Stock Exchange, but Washington Mutual shares jumped $1.50 to $54.375 on Nasdaq. Great Western’s stock closed up 50 cents at $48. Based on Monday’s share prices, Ahmanson’s stock swap offer is now worth $6.23 billion and Washington Mutual’s proposal is valued at $6.85 billion.
In appealing directly to Wall Street analysts, whose opinions can often sway investment decision making, Ahmanson is hoping to bridge the gap between the value of its bid and that of Washington Mutual. If Ahmanson is unable to do so, analysts say, the parent company of the nation’s largest thrift, Home Savings of America, would have little choice but to raise its offer.
“While economics are very much on Ahmanson’s side, market sentiments are very much on Washington Mutual’s side,” said Charlotte A. Chamberlain, analyst at Jefferies & Co. in Los Angeles. As did other analysts, she said that Washington Mutual is benefiting from its reputation as being skillful and experienced at acquisitions.
Charles Rinehart, Ahmanson’s chief executive, on Monday did not rule out a higher bid. But while reiterating his commitment to completing a merger with Great Western, Rinehart said he would not do it “at all costs.”
To that end, Rinehart and Kevin Toomey, Ahmanson’s chief financial officer, took direct aim at Washington Mutual’s projections of post-merger cost savings and revenue growth. Toomey told a group of about 45 analysts and investors at the St. Regis hotel that Washington Mutual’s claim that it can cut expenses by $340 million in 1999 is overstated by at least $100 million.
Washington Mutual spokesman Bill Ehrlich said: “We completely disagree with the assertions made by H.F. Ahmanson this morning.”
Ehrlich said he could not comment further, citing the so-called quiet period during which the company’s merger plans are being filed with the Securities and Exchange Commission. That filing is expected to be publicly available today.
Thomas F. Theurkauf Jr., an analyst at Keefe Bruyette & Woods in New York, said one of Rinehart’s arguments was noteworthy.
“I think that Ahmanson made a number of very good points on what looks to be a set of very aggressive assumptions on revenue and cost savings,” he said. “Let’s say Washington Mutual uncovers a revenue opportunity. One has to question why couldn’t Ahmanson do the same.”
