Does CNBC commentator Dan Dorfman have the inside word on the next big California thrift merger?
He certainly gave that impression on his Dec. 21 "Dorfman Report" when he singled out $15.9 billion-asset Glendale Federal Bank as a "sure-fire takeover within the next 12 months."
Mr. Dorfman said Glenfed chairman Stephen J. Trafton is rumored to be "aggressively shopping the company at over 30 bucks a share." He also quoted "takeover forecaster" Steve Kroll, managing director of Monness, Crespi & Hardt, as saying a takeover of Glenfed is likely at $30 a share, for a total price of $1.2 billion.
Potential buyers were said to be California thrifts Great Western Financial Corp., H.F. Ahmanson & Co., and Golden West Financial Corp.
Even on the basis of fundamentals, Mr. Dorfman said, Glenfed would be a good buy. He quoted Mr. Kroll as saying Glenfed was likely to win in 1996 a $1.5 billion lawsuit against the government over regulatory goodwill - a victory that would boost earnings $10 to $12 a share. Mr. Kroll reportedly set a 12-month price target of $23 to $24 in the absence of a buyout or a victory in the lawsuit.
The report forced a half-hour halt in trading of Glenfed's stock and spurred a $1 rise, to $17.87. This was its high for the year, and more than twice its 52-week low of $8.50 late in 1994. .
A Glendale Federal spokesman said the bank would not comment on the "Dorfman Report" item, as a matter of policy. In recent months, Mr. Trafton has said in interviews that Glenfed is open to a takeover but isn't counting on one.
Many stock analysts, thrift executives, and investment bankers were highly skeptical of Mr. Dorfman's analysis.
They noted that Mr. Dorfman was hardly unique in predicting that a big California thrift is likely to be acquired in the next year. Most analysts expect a wave of takeovers to commence as soon as buyers are convinced that the California economy has rebounded and that California thrifts' balance sheets are on solid ground.
"The possibility of Glenfed being a takeover candidate is certainly not brain surgery," said Gary Gordon, an analyst with PaineWebber Inc. But he and other sources said that the $30 price seems too high unless Glenfed wins the goodwill lawsuit, which is far from certain.
These observers also said they see no signs that a big merger involving Glenfed is in the works. It is more likely, they said, that Mr. Trafton will focus on improving the company's performance over the next year in order to get a higher price in a subsequent takeover.
"Our read is that Trafton is looking to aggressively add value to the Glendale franchise and then sell," said Gregory A. Mitchell, senior vice president of Hovde Financial Inc., an investment banking firm. There is "no question" that Mr. Trafton will wait at least a year to sell Glenfed, Mr. Mitchell added.
"It doesn't feel like anything's imminent," said a senior thrift executive with a big Glenfed rival, who asked not to be named.
Many observers said they see much to recommend in-market mergers of California thrifts, including a combination of Glenfed with any number of other Southern California institutions. But they said they doubted any of the three thrifts Mr. Trafton mentioned would be willing to pay the kind of premium he'd be seeking in a takeover, or that Mr. Dorfman said would be likely.
