It's deja vu all over again in Los Angeles, where a white knight has charged in from afar to rescue a locally based company from a hostile buyer.
Only this time, observers say, the white knight could well prevail. Washington Mutual, by some accounts, has a real chance of swatting down H.F. Ahmanson's hostile bid for Great Western Financial Corp.
"I think this is a done deal for Washington Mutual," said analyst Jay Tejera of Dain Bosworth Inc. in Minneapolis.
In many respects, the situation does echo the November 1995 battle for control of First Interstate Bancorp. Wells Fargo & Co.'s hostile bid ultimately prevailed over the friendly offer by Minneapolis-based First Bank System.
As in the earlier deal, the white knight is proposing a pooling of interests as an alternative to a deal that would be accounted for as a purchase. And in both cases, fear of layoffs is part of what drove the target company to seek an alternative.
In last battle, investors quickly showed their preference for Wells, bidding up the San Francisco company's shares and selling off First Bank shares.
But analysts noted some key differences that could alter the reception for the white knight this time.
Nancy Bush of Brown Brothers Harriman & Co said Wells' victory stemmed in part from its exceptional reputation on Wall Street.
"The hostile bidder was head and shoulders above the rest," Ms. Bush said, noting that investors were more inclined to give Wells Fargo's projections the benefit of the doubt.
Cost saving is usually "the determining factor" as shareholders evaluate rival merger plans, Ms. Bush added. Although Ahmanson may have some advantage over Washington Mutual, Ms. Bush argued that the cost-savings gap probably is not as wide an obstacle for Washington Mutual as it was for First Bank.
Another key difference its that Washington Mutual's bid is "cleaner" than the Minneapolis bank's, she said, pointing out that First Bank ran afoul of the Securities and Exchange Commission over its plan to use a share buyback.
And Washington Mutual, with 22 recent deals under its belt, has the edge in merger experience, Mr. Tejera said. "Ahmanson is just doubling down in a business that hasn't grown enough for them. Washington Mutual will cut costs, but do it in a way that is a lot more palatable."
He recalled the furor over Ahmanson chairman Charles Rinehart's statement suggesting that if there were any job cuts, they would come from Great Western's staff. "Ahmanson made a huge tactical mistake in saying they would slash and burn Great Western-that indicates the amateurishness of their bid," the analyst said.
What's more, Washington Mutual may have history on its side. In the handful of contested mergers in the banking industry, several white knights have succeeded.
In 1987, Marine Corp. sold to Banc One Corp., Columbus, Ohio, as an alternative to an unsolicited offer from Milwaukee rival Marshall & Ilsley Corp.
The following year, United Missouri Bancshares of Kansas City made a surprise offer for Centerre Bancorp, only to see the target's St. Louis neighbor, Boatmen's Bancshares, jump in with a friendly offer that ultimately prevailed.
And in a 1991 a battle involving Cleveland banks, Society Corp. acquired Ameritrust, which had received an unwelcome bid from National City Corp.
In fact, Ms. Bush said, the friendly bidder usually has the advantage. "There's always the issue of revenue slowdown during the integration" of two companies, she said. And a revenue slowdown is all the more likely, she said, when the new owner just completed a hostile deal.