With Great Western Financial Corp. suddenly up for grabs, Washington Mutual's talks with $8.7 billion-asset Coast Savings appear to be on the back burner.
But Coast's stock shows no sign of cooling off. As of Monday's close, Coast had risen $3.75 to $47.375 since H.F. Ahmanson & Co. announced its hostile bid for Great Western on Feb. 18.
What gives? Analysts say that though Washington Mutual has dropped Coast for now in favor of $43 billion-asset Great Western, the smaller thrift will ultimately benefit from the unfolding takeover drama.
The pace of thrift acquisitions in California and the prices paid will be higher as a result, they say.
"If Washington Mutual gets Great Western, Ahmanson and possibly Golden West Financial may be in play," said analyst Thomas O'Donnell of Smith Barney. "The next step would be Coast and Glendale Savings."
Glendale's stock is up $2.375 since Ahmanson's hostile bid. It closed at $28 on Monday.
Though much smaller than the big three thrifts-$49.9 billion-asset Ahmanson, Great Western, and $37 billion-asset Golden West-Coast and $15.1- billion Glendale would remain attractive purchases for large thrifts already in the state and out-of-state banks looking to enter California, Mr. O'Donnell said.
NationsBank is one of the names that has come up as a possible shopper. Chairman Hugh McColl has made his interest in California well known. But some analysts questioned whether the Charlotte, N.C., institution was ready for another acquisition quite so soon after its deal for Boatmen's.
Ahmanson's $6.2 billion bid for Great Western - 2.7 times book value - sets a high-water mark for thrift acquisitions, Mr. O'Donnell noted.
In the past, "two times book used to be an eye-popping kind of number for an S&L to be acquired at," he said. "It's a new day for thrift valuation, especially in California."
Todd Pitsinger, an analyst at Friedman, Billings, Ramsey & Co., agrees that Coast remains an attractive candidate.
"Following Great Western and Ahmanson, it's the only thrift with any market share," Mr. Pitsinger said. Glendale, though about a third larger than Coast, is unlikely to sell until it settles a major goodwill lawsuit against the federal government, he said.
Indeed, even if Washington Mutual doesn't get Great Western, Coast remains attractive, Mr. Pitsinger said.
It's a "meaningful transaction," because it would boost Washington Mutual's current presence in California by about 50%, and it's small enough that it would be relatively easy to do, he said.
