Four days after H.F. Ahmanson & Co. launched its audacious hostile takeover bid, Great Western Financial Corp. made its first move-a legal gambit designed to buy time.
On Friday, Great Western's board approved an amendment to its bylaws that would force shareholders to take additional steps before voting on a proxy solicitation from Ahmanson.
The move, according to legal experts, represents the first clear signal from Great Western that it wants to slow down the unsolicited bid and possibly fight it.
The amendment seeks to plug what observers call the biggest hole in Great Western's takeover defenses-the ability of shareholders to act quickly before the annual meeting. The meeting is slated for April 22.
It remains unclear, however, whether Great Western can defeat the bid, valued at more than $6 billion.
"You can throw every sort of monkey wrench in there, but shareholders have tasted victory with this higher stock price and that's what's going to drive it," said an observer. Great Western's shares closed Friday trading at $46.375, up 62.5 cents for the day and $12.125 since the bid was launched on Feb. 18.
The amendment, similar to those adopted by other target companies, requires board approval for shareholders to act on a proxy solicitation.
Specifically, shareholders must deliver a written notice to the board to set a record date-the date on which the voting shareholders would be determined. The board is then required to respond within 10 days.
"The purpose of the amendment is to prevent Ahmanson from stampeding our shareholders into acting before they have all the necessary information," said Charles E. Coleman, a Great Western spokesman. "There are many fast- moving events and it's extremely important for our shareholders to make informed decisions."
A person familiar with Ahmanson's strategy said that Ahmanson intended to respond to Great Western's maneuver by sending a letter to Great Western's board late Friday, requesting that it "refrain from any further actions designed to delay shareholder consideration of these proposals."
The message also asked that Great Western decide on Friday the record date for any proxy solicitation. That would mean the date could come no more than 20 days from Friday, the source said.
Great Western's decision to put up a fight-or at least an obstacle-may have been partially motivated by assertions made early last week by Ahmanson's chief executive, Charles R. Rinehart, that no Ahmanson employees would lose their jobs if the deal goes through. Mr. Rinehart's statements implied that all of the cuts would come from Great Western.
Mr. Rinehart backtracked on his initial statements in a letter to Great Western's board on Thursday, saying that if Great Western implements a hiring freeze, as Ahmanson has, that "layoffs of Great Western employees will be held to only a small fraction of the layoffs of the First Interstate employees in the Wells Fargo transaction, and could even be less than the layoffs of American Savings employees in the Washington Mutual transaction."
First Interstate lost an estimated 6,000 employees after being acquired by Wells Fargo & Co. last year. American Savings laid off 200 after it was purchased by Washington Mutual. Great Western has a work force of 12,000.
"If we drew attention by being candid where other acquirers are not, we are prepared to live with it," Mr. Rinehart's letter said.
However, the future of the 110-year-old Great Western, the third-largest thrift in the country with $43 billion of assets, probably won't be decided by bylaw amendments, legal experts said.
If any merger is to take place, Great Western's board must support it, regardless of pressure from shareholders, they said. Because Great Western's board has staggered terms, a common anti-takeover defense, Ahmanson will have a difficult time securing a majority, they added.
Ahmanson's hope at this point is a negotiated transaction, people familiar with its strategy said.
If the deal does go through, at least six members of Great Western's senior management team would receive the customary golden parachutes. Though the estimated compensation is subject to negotiations, based on stock holdings alone, James F. Montgomery, Great Western's chairman, stands to gain about $23 million.
John F. Maher, Great Western's chief executive, would receive in the neighborhood of $13.6 million.