Norwest Corp. chief executive Richard M. Kovacevich threw cold water Wednesday on rumors that his company would be a white knight for Great Western Financial Corp.
"We've been rumored to be doing due diligence on companies we never even looked at," Mr. Kovacevich said in an interview at an investors conference here.
Asked specifically whether Norwest was considering a bid for Great Western, which was put in play last week by a $6 billion unsolicited offer from H.F. Ahmanson & Co., Mr. Kovacevich declined to comment but acknowledged that on a number of deals, Norwest looks but doesn't bid.
"We smell everything," he said. "When you're really interested, then you have to seriously smell."
Analysts said there would be some sense to a deal between $80 billion- asset Norwest and $43 billion-asset Great Western. They have complementary mortgage banking and consumer finance businesses, for example.
Norwest is the nation's No. 1 mortgage originator, with operations nationwide.
Though it has lost significant market share in recent years, Great Western historically was a mortgage business leader. And like Great Western, Minneapolis-based Norwest has had a consumer finance subsidiary since the early 1980s.
Norwest operates retail offices in 17 states, including most of the West except for California. But unlike NationsBank Corp., for example, Norwest has not expressed a strong desire to be in California, and Mr. Kovacevich said as much Wednesday.
"California is not a state that is critical we be in," he said at the conference sponsored by Montgomery Securities. However, "it's not one that we definitely don't want to be in, like New York."
Mr. Kovacevich reiterated his promise not to overpay for an acquisition. When asked what would be a fair price, he said it would have to allow a 15% rate of return and be accretive to shareholders within the first year.
As for other possible bidders, analysts said First Bank System Inc. would have fewer synergies with Great Western. Last year, for example, it sold its mortgage business.
"Why would they pay a premium to enter the mortgage business in a far distant state?" asked Ben Crabtree, an analyst at Dain Bosworth Inc. "I don't see them having any real interest."
Washington Mutual Inc. tops most observers' lists, but some wonder whether in a deal for Great Western it might be biting off more than it can chew at the moment.
Observers said NationsBank, another possible bidder, may want to wait 18 months, then buy the successor company to an Ahmanson-Great Western merger- a strategy it has followed before.
