The news that American Savings Bank, Stockton, Calif., is being sold for $1.2 billion to Washington Mutual Inc. failed to boost the stock of other California thrifts that are seen as takeover targets.
Megamergers often spark rallies as investors speculate about the prospect for similar sales.
But analysts said investors Monday were inclined to focus on the addition of a large, new competitor to the California thrift market - as well as on the lower-than-expected price paid by Washington Mutual.
Shares of Glendale Federal Bank were unchanged at $17.50; Golden West Financial stock fell 37.5 cents, to $22.25; and Golden West Financial Corp. fell 37.5 cents, to $53.50.
Washington Mutual shares gained $4.875, to $35.
"Normally, if there is a major acquisition, there is a sympathy effect" that raises the stocks of the target's peers, said Jay Tejera, a bank analyst with Dain Bosworth. "And if Wamu is buying American, it suggests consolidationis starting to pick up in California."
But Washington Mutual is paying only 8.3 times American Savings' projected 1997 earnings, whereas most investors had expected a deal at nine to 10 times earnings, he said.
Because there is takeover speculation already built into the California thrift stocks, there was little reason for the stocks to rise any higher on the announcement, said Campbell Chaney, an analyst with Rodman & Renshaw in San Francisco.
One reason for the thin pricing may be that the deal took into account an expected Congressional resolution of the bank and thrift charter dispute, Mr. Tejera said.
Thrifts currently are paying a higher deposit-insurance premium than banks, so Congress is wrangling over how the Savings Association Insurance Fund and the Bank Insurance Fund can be set on a more equal footing.
Observers agree that thrifts probably end up paying more than banks do, and the American Savings price appears to have reckoned on that probability, Mr. Tejera said.
But investors also have reason for bullishness on future merger pricing in California.
There is a distinction between such traditional thrifts as American Savings and those such as Great Western, which have tried to emulate commercial banks, Mr. Tejera said. Acquisition multiples will be higher for the banklike thrifts, he said.
Also, now that Washington Mutual is in California, it can be expected to make more acquisitions, Mr. Tejera said. And those deals can be priced higher, because Washington Mutual will be able to get cost savings typically unavailable in a takeover from outside the market, such as the one involving American Savings, he said.
In the market Monday, the Standard & Poor's index of major banks rose 0.10%, while the overall S&P declined 0.78%.
Thomas Brown, a Donaldson Lufkin & Jenrette analyst, upgraded Barnett Banks Inc. to "outperform" from "market perform." The stock declined 25 cents, to $59.50.
In other news, Bankers Trust New York Corp. disclosed in a federal filing it had paid roughly $210 million in stock and cash for Wolfensohn & Co., which the bank agreed to buy in May.
