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New Great Western bid
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March 6, 1997: 5:50 p.m. ET
Thrift repels hostile takeover with $6.6B Washington Mutual deal
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NEW YORK (CNNfn) - Giant thrift Great Western Financial Corp. agreed Thursday to be acquired by Washington Mutual Inc. for $6.6 billion in stock, finding a "white knight" to thwart a $6 billion hostile-takeover bid from H.F. Ahmanson & Co.
"We obviously had a proposal from Ahmanson on the table and did specifically compare (both) companies," Great Western chief John Maher told CNNfn. "By any measure -- historical profitability, (future) profitability, capital strength -- (Washington Mutual) is the superior company."
Plans call for investors to receive 0.9 Washington Mutual shares for each Great Western share held.
Both thrifts' boards have already endorsed the deal, which the banks expect to close in the third quarter, subject to shareholder and regulatory approval.
Presuming the merger goes forward, the deal will create the largest thrift in the United States, with assets of about $87 billion.
More than $60 billion of those assets would be in California, the country's most lucrative banking market.
Still, Ahmanson -- the nation's largest thrift --declined to bow out, saying it was "amazed" by Thursday's deal. Analysts now expect Ahmanson to raise its offer in a continued effort to take over Great Western, the nation's second-largest thrift.
Great Western had sought out friendly bidders after Ahmanson made a hostile bid on Feb. 18.
Ahmanson had also warned that as part of the deal, it would cut $400 million in annual expenses from the combined companies' operations.
Ahmanson Chief Executive Charles Rinehart further said that expected employee cuts would come only on the Great Western side.
By contrast, Kerry Killinger, Washington Mutual's chairman, told CNNfn that Thursday's deal does not envision a "slash and burn, consolidate and liquidate the company kind of combination."
"Cost-cutting will be part of the combination, but when we looked at the opportunities it was just as important as to how we were going to build franchises," he said.
Washington Mutual added that it might take a $278 million after-tax charge as a result of the merger.
On the New York Stock Exchange, Great Western (GWF) rose 1-7/8 to 46 7/8, while Washington Mutual (WAMU) fell 1/4 to 53 and Ahmanson (AHM) dropped 1-1/4 to 40-3/4.
-- Randy Schultz
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