Will North American Mortgage Co. become the next Great Western Financial?

One analyst who follows North American said he could not rule out a rival bid for the company. Dime Bancorp announced Monday that it had agreed to buy North American in a stock swap.

"This has been a rumored takeover candidate for years. The situation seems to be drawing to a close, but the current price of the stock could be attractive enough to entice someone else to come forward," said Leslie Nelkin, an analyst at Furman Selz.

In 1994, North American announced it was for sale. At that time, NationsBank Corp. and BankBoston Corp. seriously considered buying it, investment bankers said.

"Large banks with any sort of mortgage operations could presumably extract a lot of the same efficiencies and benefits that Dime could," Mr. Nelkin said.

Norwest Corp., Chase Manhattan Corp., and Fleet Financial Group all have mortgage subsidiaries with servicing portfolios exceeding $100 billion, and all have bought mortgage banks in the last three years.

The large banks, moreover-Norwest in particular-repeatedly have stressed mortgage lending as an entree to selling other bank products.

One investment banker said several companies recently expressed interest in North American but none was willing to pay the price: As of Friday, the Dime deal was worth about $375 million, and it valued North American at about $26 a share.

Gareth Plank, an analyst at UBS Securities, said it was unlikely that another company would bid for North American. If anything, he said, the deal might lead other thrifts to consider buying mortgage companies. H.F. Ahmanson & Co., for example, spurned in its effort to acquire Great Western, might look at a mortgage company, Mr. Plank said.

Mr. Nelkin downgraded his rating on North American from "buy" to "neutral" on Tuesday, and Mr. Plank downgraded his rating from "buy" to "hold."

Both said North American shares probably won't go much higher. The stock closed Tuesday at $23.813. And Dime's investors did not seem enthusiastic about the deal. Dime's stock fell $1.125 Monday, to $17.875, then edged up to $17.934 Tuesday.

The merger agreement has a provision that would let North American terminate the deal if the price of Dime's common stock falls 20% or more. North American would have to pay Dime a $15 million breakup fee if the deal is terminated. Dime also has a right to provide additional shares if stock prices fall.

Todd Vencil, an analyst at SNL Securities in Charlottesville, Va., said that because the deal is for stock, it's difficult to say how much of a premium Dime is paying.

"A lot of it depends on what you think Dime's stock is going to do," Mr. Vencil said.

Other observers said a bidding war for North American is highly unlikely. One Wall Street mortgage trader said hostile bids are rare in the mortgage industry.

One investment banker said it would take an "incredibly motivated company" to break up the deal.

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