Washington Mutual Inc. won what could be the decisive battle in its bid to acquire Great Western Financial Corp. late Tuesday when the Securities and Exchange Commission cleared the thrifts to mail proxy materials in time for a June 13 vote.
Hostile suitor H.F. Ahmanson & Co. will ask a Delaware court to delay the vote for six weeks. But analysts say time may be running out for the Irwindale, Calif., thrift, which triggered the bidding war by making a hostile offer for Great Western in February.
Washington Mutual, of Seattle, and Great Western said they plan to have Great Western shareholders vote on their $6 billion merger agreement on June 13, the same day Chatsworth, Calif.-based Great Western has scheduled its much-delayed annual shareholders meeting and the organizational session of its board.
"The question is: Can Ahmanson do anything else to sweeten their offer?" said Thomas O'Donnell, analyst at Smith Barney Inc. "Increasing it may be the only thing" that would prompt Great Western shareholders to consider an alternative to the Washington Mutual pact, he said.
A hearing on Ahmanson's request for a delay is scheduled for May 30.
Great Western and Washington Mutual set the date on the merger vote after the SEC approved documents which explained how they planned to pay for the $6 billion deal.
Ahmanson had argued that Washington Mutual could not account for the merger as a pooling of interests, so the SEC's approval of the pooling treatment is a body blow to the hostile bidder's hopes.
During another recent unfriendly takeover battle among banks, hostile bidder Wells Fargo & Co. won after the SEC ruled First Bank System Inc. could not use pool accounting to pay for its white-knight bid for First Interstate Bancorp.
With no relief coming from federal regulators, Ahmanson must turn for help to courts in Delaware, where both Ahmanson and Great Western are incorporated.
Ahmanson wants the court to rule that Great Western has delayed its annual board meeting in violation of its bylaws and the wishes of Great Western's shareholders as expressed in a nonbinding proxy contest.
But because the meeting bylaw was endorsed by shareholders after the hostile offer was made, attorneys who advise on bank mergers believe Ahmanson will get little sympathy from the courts.
"They're not going to win," said Ronald H. Janis, partner at Pitney, Hardin, Kipp & Szuch, Morristown, N.J. "The court will say, 'Nice try, come back next year.' I can understand why they're upset, but I don't think there's anything unfair about this."
After Great Western and Washington Mutual announced their intentions for June 13, Ahmanson responded Wednesday morning by saying it would bolster its stock buyback program by another $250 million.
Wall Street welcomed the move, which highlighted an essential difference between Ahmanson's bid and Washington Mutual's; Ahmanson shares rose $1 to $41. But Washington Mutual's rose $1.81 to $54.125, enabling the Seattle thrift company to keep the value of its bid close to its rival's.
At the end of the day, Ahmanson's bid was worth $49.20, and Washington Mutual's $48.712.
Every cent of difference is crucial to Ahmanson now, said Mr. O'Donnell, because without a premium of at least 5% above Washington Mutual's offer, Ahmanson has no chance to win this bitter battle.
Although buybacks must be very aggressive to boost share price in the short-term, Mr. O'Donnell observed buybacks were a "major factor" in pushing Ahmanson's stock from the mid-$20s to nearly $45 per share before the thrift began its hostile bid.
In the meantime, Ahmanson, Great Western, and Washington Mutual are in the peculiar position of lobbying shareholders without knowing for certain when the vote will happen until the court rules.
"It's a bit of a mess," acknowledged a source close to Ahmanson.