Ahmanson Seeks to Derail Thrift Merger in Court

H.F. Ahmanson & Co., which is running out of time in the takeover battle for Great Western Financial Corp., will try to derail Washington Mutual Inc.’s proposed $6.75-billion acquisition of Great Western in court today.

Delaware Chancery Court in Wilmington, Del., has set a hearing on a request by Ahmanson, the Irwindale-based parent of Home Savings of America, to delay a shareholder vote set for June 13 on Washington Mutual’s proposal for a friendly merger with Great Western, which would create the largest thrift in the country, with assets of about $86 billion.

“It’s one of the last opportunities for Ahmanson to block the Washington Mutual transaction,” said Thomas Theurkauf, an analyst with Keefe Bruyette Woods.

Ahmanson, whose bid is valued at $6.6 billion, is seeking the delay, claiming Great Western violated its bylaws by setting a shareholder vote on the same day as a meeting to elect new directors to the board.

Ahmanson is trying to get three people backing its bid elected to the board.

Legal experts close to the situation said a court decision could come as soon as Friday but is more likely next week. One legal expert said either side was likely to appeal an unfavorable ruling.

Analysts said Ahmanson stands a lot to lose if the court rules against it.

“If Ahmanson does not prevail in creating a delay, then the Washington Mutual deal will go to the shareholder vote. The consensus view is Washington has the upper hand in the [takeover battle] and is the odds-on favorite to win,” Theurkauf said. “I think the odds are at least 80-20 Washington will win.”

Others said the odds would not change much even if Ahmanson prevails in court, although it would buy time.

“A favorable ruling for Ahmanson in court would not change the financial dynamics of the deal. The market is valuing Washington Mutual as the winner,” said Campbell Chaney, analyst with Sandler O’Neill.

Analysts said investors are favoring Seattle-based Washington Mutual’s bid because it is a friendly transaction endorsed by Great Western’s board and because of Washington Mutual Chairman Kerry Killinger’s reputation and success in executing acquisitions, a total of 22 in the last 10 years.

Ahmanson launched a hostile bid in February for Chatsworth-based Great Western and has been fighting to complete the deal despite Great Western’s rejection of the offer and its merger agreement, announced on March 6, with white knight Washington Mutual.

Based on Thursday’s prices, Ahmanson’s bid was valued at $47.40 a share, or about $6.6 billion, while Washington Mutual’s bid was worth $48.49 a share, or about $6.75 billion.

Ahmanson was unchanged at $39.50 while Great Western rose 12.5 cents to close at $46.50, both on the New York Stock Exchange.