All three companies involved in the Great Western merger battle now have reported earnings, but the financial data haven't helped either bidder gain momentum in terms of investor support.
Based on share prices at the close of trading Wednesday, H.F. Ahmanson & Co.'s hostile bid was worth $43.95 per share, 4.46% more than the friendly offer from Washington Mutual Inc., whose white-knight bid has been accepted by Great Western Financial Corp.
That's close to the 5% advantage that Charles R. Rinehart, Ahmanson's chairman, has said he needs to prevail over Washington Mutual. So far, the gap between the two bids' value has remained narrow, and analysts disagree on whether the market ever will vote conclusively in this increasingly bitter fight.
Great Western's report Wednesday that it earned $65.7 million, or 44 cents per share-well short of the 66 cents that had been expected-appeared not to affect the competition. These earnings were down from a year earlier, when Great Western reported net income of $71.3 million, or 47 cents per share.
Analyst Thomas O'Donnell of Smith Barney Inc. said Great Western's disappointing earnings were unlikely to have much of an impact on its share price because investors presume the thrift will soon be taken over. "What's driving the stock price is the bids from Washington Mutual and Ahmanson," he said.
About 14 cents of the shortfall in per share earnings was linked to merger expenses; the rest, to a large loan-loss provision, said analyst Charlotte A. Chamberlain of Jeffries & Co.
Ms. Chamberlain said she doubts the market will ever choose one bidder over the other. "The market has said, 'We're indifferent,'" she said.
At its highest, on March 21, Ahmanson's sweetened offer was worth 4.74% more than Washington Mutual's. That was five days after it had raised its offer to 1.2 Ahmanson shares for each Great Western share, from 1.05.
Ms. Chamberlain said investors are skeptical that either bidder can produce the earnings growth it projects. Both deals, she pointed out, now command considerably less market value than when first proposed.
Ahmanson's peak-$47.70 per Great Western share-came March 17 when it raised its bid to respond to Washington Mutual's March 6 friendly offer. Washington Mutual's peak-$49.05 per share-came March 11.
But Smith Barney's Mr. O'Donnell said the decline in the deal values represents a trend in Ahmanson's favor. "The lower the prices, the less goodwill on (Ahmanson's) books," he said.
Ahmanson plans to account for its acquisition of Great Western as a purchase, thus creating goodwill that must be amortized against earnings. Goodwill is the premium paid for a company over its book value.
Washington Mutual would account for the Great Western deal as a pooling of interests, which does not create goodwill.