With his $5.2 billion agreement to sell to Washington Mutual Inc., Dime Bancorp Inc. chief executive Lawrence Toal is relinquishing the independence he fought vigorously for last year - after getting more than double the money.

On Monday morning Wamu said it had agreed to buy New York-based Dime in a $5.2 billion stock and cash deal that would give the Seattle thrift its first consumer banking foothold in the New York metropolitan area.

Under the agreement, which is expected to close in the first quarter, Washington Mutual would pay $1.4 billion of cash and 92.3 million of its shares. Dime stockholders would get $40.84 for every share they own, or 1.05 Wamu share for every Dime share.

That works out to better than 1.5 times more than the $1.9 billion value of a hostile offer that Dime rejected last year from its bitter foe, North Fork Bancorp of Melville, N.Y. (To be sure, both Wamu and North Fork's share prices have just about doubled in the past year - adjusting for those rallies, North Fork's offer would have been quite a bit closer to the agreement that Dime accepted.)

Last year's hotly contested takeover battle, which North Fork halted in September by withdrawing its bid, succeeded in dissolving Dime's agreement to merge with another New York-area company, Hudson United Bancorp.

The cancellation of Dime's merger with Hudson United and the hostile bid from North Fork were "a distraction," said Mr. Toal in an interview Monday, though he denied that a sale was inevitable. "Importantly, we continued to post record earnings quarter-by-quarter … and we put that transaction very quickly in our rearview mirror."

Indeed, analysts said that though they had expected Dime could not remain solo in the long term, there was no immediate pressure for it to make a match.

"I think once new management took over, investors felt very comfortable that they could make it alone," said Gary Gordon, an analyst at UBS Warburg. Investors and analysts certainly would have been content with Dime if it stayed on its independent path for two or three more years, he said.

Still, by last summer some of the foundation for a future sale was being laid.

A July investment by Warburg Pincus Equity Partners brought with it the appointment to Dime's board of Anthony P. Terracciano as chairman. Mr. Terracciano is credited with turning around troubled Mellon Bank Corp. in the early 1990s and then with improving First Fidelity Bancorp of Paramus, N.J., before selling it to First Union Corp. in 1996. He was expected to lift Dime's share price and perhaps find it a higher bid than North Fork's.

Six months later executives from Dime and Wamu exchanged their first words on the subject. Kerry Killinger, Wamu's chairman and chief executive, recalled Monday that he approached Mr. Toal at an industry gathering around Christmas and told him "that if they ever felt that it was appropriate that they would like to do something, we would be very interested."

A couple of months later the two companies followed this up with other meetings.

These talks would have overlapped with the two big forays Wamu has already made on the East Coast. In February it closed its acquisition of PNC Financial Services Group Inc.'s residential mortgage business. In early April it announced a deal for the mortgage operation of FleetBoston Financial Corp. (The latter deal closed this month.)

"Those considerations were all independent of each other," Mr. Killinger said. "With Dime, we have been interested in the New York marketplace for some time, and we have communicated that to the capital markets."

Analysts said Dime has made progress with a program to cut costs and redirect its lending focus beyond residential mortgages. But even with these improvements, the highly competitive market in New York - which is dominated by larger financial institutions such as Citigroup Inc. and J.P. Morgan Chase & Co. - was expected to push Dime to the negotiating table.

"It's hard to grow deposits in New York. It's a very mature market, and they're competing with much larger players," said Erik Eisenstein, an analyst at Standard & Poor's.

At the same time, Mr. Gordon said, Dime's stock price reflected the expectation that it would sell at some point. While the American Banker thrift index rose 85% from early July 2000 - when Mr. Terracciano came on board - to last week, Dime's stock rose 123%, to $38.08.

Dime would give $220 billion-asset Wamu 123 branches and $14 billion of deposits, which it would use as a platform to expand its network of Starbucks-style Occasio branches. Mr. Killinger said that after the Dime branches are integrated, the company will almost immediately begin aggressively opening Occasio branches as part of its program.

But his goal is clearly to become a bigger competitor in the area.

"I will be very disappointed if five years from now Washington Mutual has 2.5% in this area" on the deposit side, Mr. Killinger said in a conference call to investors Monday from the Palace Hotel in New York.

The acquisition would also include Dime's Tampa subsidiary, North American Mortgage Co., which would give Wamu 10% of the U.S. pro forma mortgage origination market, or $42.3 billion, and $512 billion of loans. It would also give Wamu 9.9% of the U.S. servicing market.

Wamu expects to cut costs by 25% by eliminating some overlap in back-office support and mortgage operations. Mr. Killinger said it will go through "a very thoughtful process" over the next six months to evaluate where the North American and Wamu businesses are located. However, he said he could not put a number on job cuts.

The company expects to take pretax restructuring charges of $308 million, including $77 million related to the termination of Dime's Hudson United Bancorp merger.

Analysts said the price of the deal - 2.9 times Dime's stated book value, and more than Wamu paid for its last consumer bank acquisition, Bank United Corp. of Houston - seemed reasonable.

But Mr. Killinger's mother apparently had her doubts. In the conference call, Mr. Killinger recounted that he received an e-mail Monday morning that said: "Kerry, Five billion dollars is a lot to spend. Good Luck. Love, Mom."

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