In an effort to regain its footing in the battle for Great Western Financial Corp., H.F. Ahmanson & Co. said Monday it has indications of early shareholder support.
Ahmanson, in advertisements in major newspapers Monday, said that 80% of the shareholders that have responded to date support Ahmanson's initiatives and that 19 of the 20 largest shareholders support its hostile bid.
But Great Western, which has agreed to a white-knight merger with Washington Mutual Inc., called the assertion hogwash.
"For Ahmanson to tout the fact that a significant percentage of the 'voted' shares have supported its consent is silly as well as misleading," Great Western said in a statement.
The results of the shareholder survey, called a consent solicitation, should be clear by the end of this week, when Ahmanson expects it to be completed. The responses could determine how this takeover drama, now in its seventh week, plays out, observers said.
For its solicitation to be successful, Ahmanson needs 50% of all outstanding shares voted in its favor, not just a simple majority of those responding. A favorable response would send a strong message to Great Western's board. Conversely, coming up short could be a devastating setback for Ahmanson.
"When you have 50% of the shareholders voicing support in any direction, that sends a very powerful message to the board," said Rick Grubaugh, managing partner of Beacon Hill Partners, a proxy solicitation firm in New York.
A sampling of major holders of Great Western stock showed an unclear picture at this point. The Michigan Department of Treasury, for example-the thrift's eighth-largest shareholder, with just under three million shares, a 2.17% stake-said it had responded in favor of Ahmanson's proposals. It would not say why.
James K. Schmidt, portfolio manager at John Hancock Funds in Boston, said he was still making up his mind.
"It's close," he said. "In this sort of situation you have to give more credit to the friendly one because it will be easier for them to deliver, but I'm going to have to give this more study."
But observers said that Ahmanson's assertions about shareholder support are difficult to verify. Ahmanson has no idea at this point how many shareholders have supported Great Western, which prefers the Washington Mutual offer, they said.
"Both sides only have half of the information available," said Mr. Grubaugh. "Shareholders can change their votes four or five times during this process, so it's impossible until the end to make any kind of assessment," he added.
Ahmanson also would not say how many shareholders had committed themselves so far. That question is critical because if it gets 80% of those responding but fewer than 50% of all outstanding shares respond, then its proposals would not be approved.
The consent solicitation may be Ahmanson's best chance to crack Great Western's stony resistance to its overtures, observers said.
Last week, Great Western rejected Ahmanson's revised bid, prompting Charles R. Rinehart, chief executive officer of Ahmanson, to liken Great Western's actions to a communist election where choices are nonexistent.
The solicitation asks Great Western shareholders for support on five proposals, four of which would affect the company's bylaws. The most important proposal asks shareholders to set the annual meeting for April 22, or within 14 days of that date.
Ahmanson wants the meeting to be held soon because when it announced its hostile bid in mid-February it proposed three directors of its choosing to be elected to Great Western's board. Great Western responded by indefinitely postponing the meeting.
"They have been implacable in their opposition, so we don't think we'll get a fair shake at the annual meeting," said a source in the Ahmanson camp.
"That's why we want those directors so we can make sure that the hen house will be guarded by someone interested in the welfare of the hens as opposed to the welfare of the wolves," the source added.
White knight Washington Mutual expects a special shareholders meeting for a vote on its merger proposal in mid- to late May.
In the meantime, Ahmanson continues to swing away at Washington Mutual's pooling of interests accounting treatment.
Ahmanson said last week it had asked the Securities and Exchange Commission to review Washington Mutual's ability to do a pooling based on statements the company had made in investor presentations in recent weeks.
At Monday's close, Ahmanson's offer was worth $43.80 a share; Washington Mutual's, $43.48.