Michael Price is at it again.
The investor who pushed the old Chase Manhattan Corp. into a merger with Chemical Banking Corp. three years ago is now leading a charge against Commercial Federal Corp., a $12.9 billion-asset thrift company based in Omaha.
In a Securities and Exchange Commission filing this week, Franklin Mutual Advisers Inc., the Short Hills, N.J.-based investment firm that Mr. Price leads and that owns 7.7% of Commercial Federal, said the thrift has no "realistic, stand-alone operating plan (that) can come close to generating shareholder returns that would result from a sale or merger."
The 13-D filing, which allows Franklin Mutual to discuss a possible sale with other shareholders and with potential acquirers, also maintained that Commercial Federal's own recent purchases "have systematically diminished shareholder value."
Commercial Federal should sell now before it loses any more value, said Franklin senior vice president Raymond Garea, a longtime associate of Mr. Price. "The window is already starting to close," he said.
But William A. Fitzgerald, Commercial Federal's chairman and chief executive officer, said the board is committed to independence. After a review with investment bankers in April, "our advisers as well as the board believed the value to stockholders was better for a longtime hold," he said.
Franklin, a subsidiary of Franklin Resources Inc., was attracted by Commercial Federal's cheap valuation and started accumulating its shares in January 1998. Franklin's stake in the company is worth $118.3 million.
However, Commercial Federal's stock price has languished as it struggled to integrate seven acquisitions. Franklin has lost confidence in management's ability to improve the thrift's performance, Mr. Garea said.
"There's a very long list of buyers for this company," he said. Though he would not name any potential bidder, analysts said U.S. Bancorp, TCF Financial Corp., Wells Fargo & Co., and Washington Mutual Inc. would all be possibilities.
Franklin has a month to decide whether it will begin a proxy fight to win seats on Commercial Federal's board during the company's November annual meeting.
The push for a sale is supported by at least one other shareholder- William A. Krause, Commercial Federal's largest individual owner and a former director.
"Today to go through life as a single entity-that's like trying to swim up the Mississippi River," said Mr. Krause, who acquired 3.57% of Commercial Federal when he sold his Des Moines-based Liberty Financial Corp. to the thrift last year.
Mr. Krause, who resigned for personal reasons from Commercial Federal's board in May, said he was the only director who voted for a sale at the thrift's April strategy meeting.
"My rebuttal was, 'What are we out if we invite some people to the Tupperware party?'" he said. "We should have a better idea of what other banks think of our stock."
Analysts said they do not blame Franklin or Mr. Krause for their frustration with Commercial Federal's performance.
"Investors are angry," said Heather Rosenkoetter, a bank analyst at Friedman, Billings, Ramsey & Co. in Arlington, Va. "The stock has traded sideways for months."
In the past year, Commercial Federal's shares have traded in a $22 to $24 range. The stock closed Thursday at $24.1875, up $1.6875.
The thrift reported earnings of $16.2 million for the quarter that ended March 31, a 19% gain from a year earlier, and met consensus estimates for profits per share of 54 cents.
However, investors were disappointed that revenue gains and cost-cutting from the recent acquisitions had not materialized.
Mr. Fitzgerald said Commercial Federal's performance is expected to improve soon. "It looks exciting going forward," he said.
Analysts said they are eagerly awaiting Commercial Federal's June fiscal yearend earnings results, which are due next week.
