Shareholders on Friday overwhelmingly approved the merger of Great Western Financial Corp. with its friendly suitor, Washington Mutual Inc., in a deal that will forge the nation’s largest thrift, with about $90 billion in assets.
The merger must be approved by federal regulatory agencies, but that is expected by early July, Great Western executives said.
Seattle-based Washington Mutual will exchange 0.9 share of stock for each Great Western share. Based on Friday’s stock prices, the deal will cost Washington Mutual about $7.2 billion.
Great Western Bank will keep its name in California and Florida. But about 100 overlapping branch offices will be closed, company executives said. Analysts predict that hundreds or even thousands of jobs will be trimmed.
Great Western has 12,000 employees, 7,600 of them in California. The combined thrift will have 1,500 branch and loan offices in 36 states.
Great Western became a takeover target in February when H.F. Ahmanson & Co. launched a hostile bid, which led to months of vigorous legal battles as Great Western courted a rival offer from Washington Mutual. Last week, after Ahmanson lost a key court ruling, it dropped out of the bidding.
Before Ahmanson unveiled its takeover bid, Great Western’s stock traded for about $34. Friday, Great Western closed at $52.25 per share, down 12.5 cents; Washington Mutual closed at $58.50, down 25 cents.
Great Western’s special meeting was held in its cafeteria in Chatsworth, across the street from its headquarters. There was little drama in the voting, and after the final shareholder tally was announced at 98% in favor of the deal, the 200 or so in attendance broke into polite applause.
A few hours later in Seattle, holders of 93% of Washington Mutual’s shares approved the deal as well.
After its shareholders meeting concluded, Great Western Chief Executive John Maher said that however many employees lose their jobs as a result, there would have been twice as many had Ahmanson, parent of Home Savings, taken over Great Western.
Several months ago, Great Western set up a generous severance package of six to 18 months pay for its employees. Few have left the company since then, and morale has improved, employees say.
At Great Western’s sprawling headquarters campus in Chatsworth, there are about 3,000 employees, from tellers to day-care workers and data processors, plus administrative staff, and many expect to lose their jobs, although Washington Mutual said it will be weeks before it has a blueprint for consolidation plans.
Laura Snow, who works in Great Western’s public relations office, has been with the company only since November. She is now pregnant with her first child, due in August, and for her there is a bit of serendipity in the change of fortunes at Great Western.
“It sounds awful. But hopefully I’ll be laid off so I can take advantage of the severance package and be a full-time mom,” she said.
The sale of Great Western marks the end of an independent financial institution that dates back to 1887, when a savings and loan opened in Santa Barbara. For several years, Great Western, which was hammered by the state’s recession in the early 1990s, has been considered a prime takeover target, in part because it was top-heavy in administrative costs.
Great Western broadened its financial services recently, though, while trimming 5,000 jobs.
Maher, who took over as CEO only last year, said “I’m disappointed we didn’t have a little more time” to run the company, because its financial performance was improving. Great Western became a takeover target, he insisted, because “we were considered the most bank-like thrift in California.”
Washington Mutual moved into California last year by purchasing American Savings Bank, based in Irvine, for $1.7 billion and now becomes a major player in the state, with about 17% of total bank deposits.
One Great Western shareholder present at the meeting Friday was George Lewis, who has owned its stock since the company went public in 1955. He bought those for less than 50 cents a share and said the merger with Washington Mutual would lead to a more efficiently run company.
When Great Western struggled in the early ‘90s, Lewis said, “People got discouraged. And they lost out on valuable securities they should have held.”