Washington Mutual Inc. lost valuable time promoting its bid for control of Great Western Financial Corp. after the Securities and Exchange Commission told it March 7 to curtail discussion of the deal until regulatory filings were complete.
Kerry Killinger, chief executive of Washington Mutual, was in the middle of talking up the deal to large shareholders in Boston and New York the day after announcing his white-knight deal, when he was advised to stop until a filing, called an S-4, had been made.
"We were contacted by the SEC, and it was an informal call," said Bill Ehrlich, a Washington Mutual spokesman. "We made the decision to postpone our discussions in light of that conversation."
The decision meant that investors, whose opinion will likely decide the outcome of the battle for Great Western, heard only from H.F. Ahmanson & Co. through last Thursday when the document was filed. Ahmanson launched a hostile bid for Great Western Feb. 18.
Great Western also chose to delay for a day the full-page ads it had planned to unveil in several major newspapers last Wednesday due to concern that they might violate regulatory procedures.
Whether Washington Mutual's initial discussions with investors violated the so-called quiet period-the time between the announcement of a deal and certain regulatory filings-is unclear, legal experts said.
One lawyer experienced in mergers said it is not uncommon for acquirers to talk to analysts before an S-4 filing. Lawyers said an acquirer typically files an 8-K form, which Washington Mutual did, before speaking with investors. The more voluminous S-4 usually is filed in the following weeks.
An SEC spokesman acknowledged that the rules covering the quiet period, particularly in a "hostile" situation, are "a little tricky." The commission "contacts registrants all the time," he added, "and registrants contact the commission, for that matter."