Great Western Financial Corp. has accused H.F. Ahmanson & Co. of an irregularity in tallying shareholder votes.
Great Western said its unwelcome suitor allowed double-counting of a large investor's vote on the date of the target company's annual meeting.
Terming the behavior "outrageous," Great Western vowed to have the matter resolved in court. Extended legal wrangling could frustrate Ahmanson's attempt to force shareholders to consider its bid to buy its rival.
The Delaware Chancery Court could take up the double-counting matter this week. It ruled Friday in favor of Ahmanson in a related matter, refusing to dismiss its claim that Great Western violated its own bylaws by scheduling its annual meeting June 13.
Ahmanson has said it wants the meeting held earlier so it can present its case before shareholders can vote on Washington Mutual Inc.'s competing, friendly bid for Great Western.
A source in Ahmanson's camp said the court dismissed an argument that Great Western violated its fiduciary duty by scheduling the meeting. But it asked Great Western to file affidavits and submit to interrogation by Ahmanson on the scheduling issue.
The accusation of double-counting "will delay these questions for some time to come," said a person familiar with Great Western's strategy.
"This is America, and in America you are supposed to vote once, not twice," said Ian Campbell, a spokesman for Great Western in Chatsworth, Calif. "Their posture on this is just flabbergasting."
Mr. Campbell said that in reviewing the votes of the recently completed consent solicitation, which included a question on the date of the annual meeting, Great Western found that an institutional shareholder had inadvertently voted 5,209,800 shares twice.
The unnamed shareholder, which is believed to be a large East Coast financial institution, wrote a letter to the inspector tabulating the votes, explaining that the firm had mistakenly voted both by mail and electronically.
Mr. Campbell said the inspector, CT Corporations Systems, declined to rule on the question of the double vote, sending Great Western to court.
He added that Irwindale, Calif.-based Ahmanson was informed of the mistake but insisted that the double vote not be discounted because Delaware law prohibits the inspector from accepting "extrinsic evidence"-in this case the letter from the shareholder.
Ahmanson asserted that even excluding the 5.2 million disputed shares, it has the necessary majority of Great Western stock to force an earlier meeting date.
"We had no choice but to submit that," an Ahmanson source said. "It's not for us to say that it's a double-count and not submit it."
If the 5.2 million votes eventually are thrown out, Ahmanson could lose its majority. But the Ahmanson source said that not enough of those shares would be thrown out-because not all were double-counted-to change the outcome in Great Western's favor.
On a related matter, Ahmanson blasted Great Western for not agreeing to let the inspector count the votes on another proposal of the consent solicitation-the request to have Great Western open its books and consider Ahmanson's merger offer.
"I am still curious why there has been no additional communication between the companies, other than these media barbs," said an owner of 8% of Great Western's stock.
