After 109 days and at least 75 press releases, the battle for Great Western Financial Corp. is over.
And one of the biggest reasons it turned out the way it did was the performance of Great Western's outside counsel, the New York law firm of Skadden, Arps, Slate, Meagher & Flom.
The firm summoned its years of combat experience in takeovers-not to mention 12 partners and at least 24 associates-in defending the big California thrift against its undesired suitor and longtime rival, H.F. Ahmanson & Co.
In Delaware, where court activity was centered, Skadden Arps partner Rodman Ward Jr. said he spent 200 hours per month on the case, handling litigation.
Skadden partner Peter A. Atkins, who represented RJR Nabisco Inc. in its $25 billion leveraged buyout by Kohlberg Kravis Roberts & Co. in 1987, said the key to success in this particular battle was killing the momentum Ahmanson had in the days after it announced its unsolicited bid.
Ahmanson chief executive Charles R. Rinehart called his counterpart at Great Western, John F. Maher, in the late afternoon of Feb. 17 to tell him his intentions. The bid was publicly unveiled the next day.
"The timing of the call was meant to not let people think," Mr. Atkins said. "Ahmanson was trying to say to the Great Western board, 'You have no alternative.' And they were trying to discourage others from making another offer. What the board needed was the time to think."
Going slow in the midst of Ahmanson's stampede-a wise approach to any merger offer, hostile or friendly, advisers say-served Great Western well through four months of hostilities.
The clash featured a rematch of the parties in banking's last hostile takeover fight.
Ahmanson, based in Irwindale, Calif., was represented by Credit Suisse First Boston, Montgomery Securities, and the law firm of Sullivan & Cromwell, the same team that advised Wells Fargo & Co. in its hostile takeover of First Interstate Bancorp.
Great Western, headquartered in Chatsworth, Calif., was advised by First Interstate's team, Skadden Arps and Goldman, Sachs & Co.
The reason the hostile bid succeeded last time but failed here, said Ronald H. Janis, attorney at Pitney, Hardin, Kipp & Szuch, Morristown, N.J., was that Sullivan & Cromwell was unable to derail the white knight's bid on regulatory grounds.
After Washington Mutual Inc. entered the fray on March 6 as a white knight, Ahmanson's lead outside counsel, H. Rodgin Cohen, mounted an intense campaign to damage the rival bid by claiming the company could not account for the merger as a pooling-of-interests.
If Mr. Cohen had succeeded, Washington Mutual would likely have been compelled to withdraw its bid, just as First Bank System Inc. did when the Securities and Exchange Commission ruled it could not pool for First Interstate.
"I am abundantly sure that Skadden didn't do anything differently than they did with First Interstate," said Mr. Janis.
"They took it slow, looked for a better offer, and then exchanged barbs with the other side," Mr. Janis said. "The difference was that when Ahmanson tried to rattle the cage of the SEC, it didn't work."
While Mr. Cohen and his colleagues at Sullivan & Cromwell tussled with regulators, Fred B. White 3d, co-head of Skadden's financial institutions group, said Great Western and Washington Mutual got busy selling their deal to the market.
"We never came up and said, 'Don't talk to Ahmanson,'" Mr. White said. "The board simply felt they had a superior deal with Washington Mutual. Great Western had dealt with Ahmanson in the past, and they weren't on the screen this time."
As Great Western and Washington Mutual management touted the deal to investors, their lawyers developed a "rapid response" team that countered within hours every announcement Ahmanson made in what rapidly turned into a war of press releases.
"You'd never know which bullet would be shot," said Mr. Atkins. "But if they (Ahmanson) were left unchallenged, the incorrect information they released could have affected the market."
Every press release, the attorneys said, resulted in about six other documents being filed with regulators. In fact, both sides in the contest accused the other of misleading or withholding information from shareholders throughout the fight.
"They took nonissues and tried to make them issues," said Michael P. Rogan of Skadden Arps' Washington office.
At the very least, these issues seemingly did not catch on with the market like they did in the Wells Fargo/First Interstate battle.
"They were fighting last year's war," said Skadden partner Daniel E. Stoller.
The Skadden attorneys said they were surprised Ahmanson put so much effort into a consent solicitation process rather than immediately beginning an exchange offer of shares. Ahmanson sources say they felt it would be improper to commence the tender offer while they were aggressively buying back shares from investors. Nevertheless, Ahmanson's focus on the consent solicitation, designed to hasten a shareholder meeting, perfectly fit the Skadden Arps strategy of playing for time.
Ahmanson presented Great Western's side with another gift when it acknowledged votes in the proxy contest had been included twice. The time it took to unravel this mess played into Great Western's hands and gave it the chance to complain about election fraud misrepresenting the wishes of the shareholders.
But in the end, all the legal to-ing and fro-ing paled next to one single point: Washington Mutual's bid was worth more than Ahmanson's. Faced with this fact, Ahmanson threw in the towel.
Although Ahmanson experienced a loss in its hostile takeover bid, Mr. White said it was unlikely that the banking industry has seen the last of hostile takeovers.
"They will remain infrequent, but with fewer good properties in a consolidating industry, there will be a few that have a superior stock and superior merger history who will consider this course."
In the end, the Skadden attorneys agreed, this wasn't the easiest hostile defense they'd ever done, but neither was it the hardest.
Mr. Atkins probably summed up their feelings: "For someone perverse enough to like it, it's fun."