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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [_]
Filed by a Party other than the Registrant [X]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[X] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
GREAT WESTERN FINANCIAL CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
H. F. AHMANSON & COMPANY
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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Notes:
[LETTERHEAD OF MACKENZIE PARTNERS, INC.]
April 4, 1997
H.F. AHMANSON & GREAT WESTERN FINANCIAL
CONSENT SOLICITATION
Dear Investor:
For your convenience and information, enclosed is a copy of the Institutional
Shareholder Services recommendation regarding the H.F. Ahmanson & Company
consent solicitation of Great Western Financial Corporation shareholders.
ISS supports four of the five consent proposals. If you have a position in Great
Western and have not yet done so, please execute the WHITE consent. As you know,
Ahmanson has requested that you vote promptly.
We thought you would appreciate the direct receipt of documents concerning this
important matter. If you have any questions, need additional material or help in
executing a consent, call Dan Burch (212) 929-5748, Larry Dennedy (212) 929-5239
or Joseph Doherty (212) 929-5958, all of MacKenzie Partners.
Sincerely,
MACKENZIE PARTNERS, INC.
The consent of Institutional Shareholder Services to the use of the attached
Proxy Analysis as soliciting material has not been obtained.
SHARES OF GREAT WESTERN FINANCIAL CORPORATION ("GWF")
COMMON STOCK HELD BY H.F. AHMANSON & COMPANY
("AHMANSON"), ITS DIRECTORS AND EXECUTIVE OFFICERS
AND CERTAIN EMPLOYEES, OTHER REPRESENTATIVES OF AHMANSON
AND CERTAIN OTHER PERSONS WHO MAY SOLICIT PROXIES OR
CONSENTS, AND CERTAIN TRANSACTIONS BETWEEN ANY
OF THEM AND GWF
Ahmanson and certain other persons named below may solicit proxies (a) to elect
three nominees and one or more alternate nominees (the "Nominees") as directors
of GWF at the annual meeting of stockholders of GWF to be held on a date to be
announced (the "Annual Meeting") and (b) in favor of the adoption at the Annual
Meeting of a non-binding stockholder resolution and seven proposals to amend the
By-laws of GWF. Ahmanson and certain other persons named below are also
soliciting consents from stockholders of GWF to approve proposals, without a
stockholders' meeting, to adopt a non-binding resolution of stockholders and
amendments to the By-laws of GWF. The participants in this solicitation may
include Ahmanson; the directors of Ahmanson (Byron Allumbaugh, Harold A. Black,
Richard M. Bressler, David R. Carpenter, Phillip D. Matthews, Richard L. Nolan,
Delia M. Reyes, Charles R. Rinehart, Frank M. Sanchez, Elizabeth A. Sanders,
Arthur W. Schmutz, William D. Schulte, and Bruce G. Willison); the following
executive officers and employees of Ahmanson or its subsidiaries: Kevin M.
Twomey (Senior Executive Vice President and Chief Financial Officer), Madeleine
A. Kleiner (Senior Executive Vice President, Chief Administrative Officer and
General Counsel), Anne-Drue M. Anderson (Executive Vice President and
Treasurer), Tim S. Glassett (First Vice President and Assistant General
Counsel), Linda McCall (Senior Vice President and Director of Corporate Taxes),
Stephen A. Swartz (Senior Vice President and Director of Investor Relations),
Barbara Timmer (Senior Vice President and Director of Government and Legislative
Affairs), Mary A. Trigg (Senior Vice President and Director of Public
Relations), Eric Warmstein (Senior Vice President and Director of Corporate
Development), Samantha Davies (Vice President of Public Relations), Adrian
Rodriguez (Vice President of Public Relations), and Peter Bennett (Assistant
Vice President of Public Relations); and the following Nominees: Lawrence A. Del
Santo, Robert T. Gelber, Wolfgang Schoellkopf, Hugh M. Grant and John E. Merow.
As of April 3, 1997, Ahmanson is the beneficial owner of 3,134,100 shares of GWF
Common Stock. Other than Mr. Gelber, who owns 332 shares of GWF Common Stock,
none of the Nominees is the beneficial owner of any GWF Common Stock.
Other than set forth herein, as of April 3, 1997, neither Ahmanson nor any of
its directors, executive officers or other representatives or employees of
Ahmanson, any Nominees or other persons known to Ahmanson, who may solicit
proxies has any security holdings in GWF. Ahmanson disclaims beneficial
ownership of any securities of GWF held by any pension plan or other employee
benefit plan of Ahmanson or by any affiliate of Ahmanson. Ahmanson further
disclaims beneficial ownership of any securities of GWF held by Ahmanson or any
of its subsidiaries for the benefit of third parties or in customer or fiduciary
accounts in the ordinary course of business.
Although Credit Suisse First Boston Corporation ("CSFB") and Montgomery
Securities ("Montgomery"), financial advisors to Ahmanson, do not admit that
they or any of their directors, officers, employees or affiliates are a
"participant," as defined in Schedule 14A promulgated under the Securities
Exchange Act of 1934 by the Securities and Exchange Commission, or that such
Schedule 14A requires the disclosure of certain information concerning CSFB or
Montgomery, CSFB and Montgomery may assist Ahmanson in such a solicitation. Each
of CSFB and Montgomery engages in a full range of investment banking, securities
trading, market-making and brokerage services for institutional and individual
clients. In the normal course of their respective businesses, each of CSFB and
Montgomery may trade securities of GWF for their own account and the account of
their customers and, accordingly, may at any time hold a long or
short position in such securities. As of April 3, 1997, CSFB held a net long
position of 4,824 shares of GWF common stock and Montgomery held no shares of
GWF common stock.
Except as disclosed above, to the knowledge of Ahmanson, none of Ahmanson, the
directors or executive officers of Ahmanson, the employees or other
representatives of Ahmanson who may participate in this solicitation or the
Nominees named above has any interest, direct or indirect, by security holdings
or otherwise, in GWF.
[LOGO] INSTITUTIONAL
SHAREHOLDER
SERVICES/SM/
Proxy Analysis: GREAT WESTERN
FINANCIAL CORP.
GWF (NYSE)
Written Consent: May 12, 1997
Record Date: March 13, 1997
Security ID: 391442100 (CUSIP) 39144210 (CUSIP) 2384906 (SEDOL)
MEETING AGENDA
ITEM CODE DISSIDENT PROPOSALS (WHITE CARD) DIS. REC ISS REC.
[_] 1 S0810 Consider Merger Proposal Consent CONSENT
[_] 2 S0326 Amend Articles/Bylaws/Charter Consent REVOKE
to Remove Antitakeover Provisions CONSENT
[_] 3 S0102 Change Date/Time of Annual Meeting Consent CONSENT
[_] 4 S0326 Amend Articles/Bylaws/Charter to Consent CONSENT
Remove Antitakeover Provisions
[_] 5 S0810 Require Shareholder Approval of Consent CONSENT
Certain Bylaw Amendments
ITEM CODE MANAGEMENT PROXY (BLUE CARD) MGT. REC. ISS REC.
[_] 1 S0810 Consider Merger Proposal Revoke CONSENT
Consent
(Continued next page)
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MEETING AGENDA
ITEM CODE PROPOSALS MGT. REC. ISS REC.
[_] 2 S0326 Amend Articles/Bylaws/Charter Revoke REVOKE
to Remove Antitakeover Provisions Consent CONSENT
[_] 3 S0102 Change Date/Time of Annual Meeting Revoke CONSENT
Consent
[_] 4 S0326 Amend Articles/Bylaws/Charter to Revoke CONSENT
Remove Antitakeover Provisions Consent
[_] 5 S0810 Require Shareholder Approval of Revoke CONSENT
Certain Bylaw Amendments Consent
*To follow ISS's recommendation regarding this consent solicitation, return the
dissidents' WHITE card with the votes recommended above.
NOTE: This recommendation is for the consent solicitation only. ISS is not
currently making a recommendation regarding the specific merger proposals.
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FINANCIAL SUMMARY
INCOME STATEMENT SUMMARY ($ in millions except per share data)
1994 1995 1996 ACG*
---------- ---------- ---------- ------
Net Interest Income $1,322.27 $1,302.13 $1,378.00 2.1%
Net Earnings 251.23 261.02 115.80 -32.1%
EPS (Primary) 1.69 1.71 0.69 -36.1%
Dividends per share 0.92 0.92 0.98 3.2%
Calendar year-end $ 16.00 $ 25.38 $ 44.25**
stock price
Dividends paid since: 1972
- --------------
* Annual Compound Growth
** Current Price
Fiscal Year Ended: December 31
Source: Company Annual Report
PERFORMANCE SUMMARY
1-YEAR 3-YEAR 5-YEAR
--------- --------- ---------
Total shareholder returns, company 65.2% 18.7% 21.6%
Total shareholder returns, index 37.8% 15.4% 16.5%
Total shareholder returns, peer group 53.8% 18.0% 25.1%
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Source: Company Proxy Statement
BUSINESS: Financial services provider
ACCOUNTANTS: Price Waterhouse LLP
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CORPORATE GOVERNANCE PROFILE
GOVERNANCE PROVISIONS
Blank check preferred stock (Charter, April 17, 1979)
Classified board (Charter, April 19, 1983)
D&O liability protection for acts made in good faith (Charter, April 28, 1987)
Poison pill with sunset provision greater than two years (Adopted: June 1986;
Amended: June 1995)
GOVERNANCE MILESTONES
None
SEVERANCE AGREEMENTS
Change-in-control provisions in executive stock option or other compensation
plan
Golden parachute executive severance agreements triggered by a change in control
Pension parachutes, which provide accelerated pension benefits, triggered by a
change in control
STATE STATUTES: Delaware
Labor contract provision
Three-year freezeout provision
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DIRECTOR PROFILES
Name Classification Term Dir. No
Ends Since Stock
David Alexander O 1999 1973
H. Frederick Christie O 1999 1984
Stephen E. Frank O 1998 1993
John V. Giovenco O 1997 1985
Firmin A. Gryp/1/ A 1997 1982
Enrique Hernandez, Jr. O 1998 1993
John F. Maher I 1998 1976
Charles D. Miller O 1999 1981
James F. Montgomery/2/ A 1997 1975
Alberta E. Siegel O 1997 1976
Willis B. Wood, Jr. O 1998 1990
Classified board: Yes CEO as chairman: No
Current nominees: 0 Retired CEO on board: Yes
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COMPOSITION OF COMMITTEES
Audit Type Compensation Type Nominating Type
David Alexander O H. Frederick O David Alexander O
Christie
H. Frederick O Stephen E. Frank O Stephen E. Frank O
Christie
Stephen E. Frank O John V. Giovenco O John V. Giovenco O
John V. Giovenco O Firmin A. Gryp A Firmin A. Gryp A
Firmin A. Gryp A Charles D. Miller O John F. Maher I
Enrique O Willis B. Wood, Jr. O Charles D. Miller O
Hernandez, Jr.
James F. A
Montgomery
Alberta A. Siegel O
Committee Name Assigned by Company:
Audit: Audit and Finance Committee
Compensation: Compensation Committee
Nominating: Director Affairs Committee
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CAPITAL STRUCTURE
CAPITAL STRUCTURE
Type of Shares Votes Authorized Shares
per Shares Outstanding
Share
Common stock 1.00 200,000,000 137,574,634
OWNERSHIP INFORMATION
Beneficial Owner Total Voting Power
Officers & Directors 1.58%
Institutions 77.87%
____________
Sources: Proxy Statement, CDA Investment Technologies
BACKGROUND
On Feb. 18, 1997, H.F. Ahmanson & Co. (HFA) announced that it had made a hostile
takeover offer for Great Western Financial Corp. (GWF). Under the terms of the
original offer, HFA would exchange each outstanding GWF common share for 1.05
shares of HFA common stock. HFA also filed a lawsuit seeking to stop the GWF
board from implementing any antitakeover devices that might impede the HFA
proposal. The GWF board and management immediately began a process to assess
the offer and to review potential combinations with other regional and super-
regional banks.
On March 3, approximately two weeks after its first merger offer was submitted
to GWF, HFA began a consent solicitation seeking approval from GWF shareholders
for five proposals designed to facilitate consideration of the HFA merger offer
by the GWF board. The first proposal of the original consent asked shareholders
to instruct the board to negotiate a sale with HFA unless a better offer emerged
prior to May 22. According to the HFA consent materials dated March 3, "Despite
the significant economic benefits to the stockholders of Great Western that we
believe would accrue from the Ahmanson merger proposal, Great Western's current
Board of Directors has not yet found the time to respond to the Ahmanson Merger
proposal." The first two of the five proposals have subsequently been amended
due to a competing offer for GWF by Washington Mutual, Inc. (WAMU). However,
the proposal set the tone for the HFA's consent solicitation. In response to
HFA's hostile bid, GWF indefinitely postponed its regularly scheduled April
annual meeting in light of the events surrounding the merger proposal.
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HFA has indicated that it intends to nominate three directors in opposition to
GWF's nominees at the company's annual meeting. The election of directors is
not part of this consent solicitation.
WASHINGTON MUTUAL
Two days after the HFA consent materials were published, GWF urged its
shareholders not to consent to the HFA proposals. On the next day, GWF
announced that it had entered into a definitive merger agreement with WAMU. The
WAMU exchange offer of 0.9 WAMU shares for each GWF share was 12 percent higher
than the original HFA offer on the date of the WAMU announcement.
Despite allegations of excessive synergy projections from the mergers by both
sides, the general Wall Street consensus after WAMU's entrance into the picture
was that HFA would have to raise its bid to remain competitive with WAMU's
offer. On March 17, HFA did just that, implementing a sliding exchange ratio
between 1.1 shares of HFA common stock for each GWF share and 1.2 shares. The
improved offer was intended to target a $50.00-per-GWF share exchange. The
current offer by HFA includes collars on the exchange ratio intended to provide
unlimited upside potential to the deal, but somewhat limited downside. The
offer specified that if HFA common stock is trading between $41.67 and $45.45
per share, GWF shareholders would receive $50.00 per share of HFA common stock.
However, if the stock price falls below $41.67, the exchange ratio would be
collared at 1.2 HFA shares per GWF common share, and if the HFA stock price
exceeds $45.45, the exchange ratio would move to 1.1 shares of HFA shares per
GWF share. Based on the closing prices of HFA and WAMU common stock on April 1,
the HFA offer is worth approximately $4.40 per share, compared to the WAMU offer
of $45.31 per share.
Along with its raised offer, HFA announced that it had amended the first two
proposals on its consent solicitation (see below). The first proposal now seeks
to require the GWF board to allow any potential merger partner with a bona fide
offer to have access to the same confidential information provided to WAMU (Item
1). The second proposal was changed to a nonbinding resolution rather than a
bylaw amendment. Item 2 would require that the GWF board not grant any third-
party breakup fees, stock options, "crown jewel" options, or other lock-up
arrangements with an aggregate value in excess of $100 million without prior
shareholder approval. The current WAMU deal has an aggregate termination fee of
$195 million payable to WAMU should GWF end the agreement and merge with another
party within 18 months. HFA also announced a "target" date for consent
solicitations of March 27, only ten days after its amended offer and consent
proposals. Shareholders should note that the "target" date chosen by HFA can be
extended at HFA's sole discretion and is not the final date that shareholder
votes may be counted. According to Delaware law, shareholders have 60 days from
the record date to vote on the consent solicitation. As the record date has
been set at March 13, by law shareholders have until May 12 to
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respond to the consent. The target date was the date HFA would have preferred
to have the votes delivered to the GWF board, however.
MEETINGS WITH HFA, WAMU, AND GWF
ISS has held meetings with representatives from all three companies over the
past three weeks. Representatives from HFA included: Charles Rinehart, CEO;
Kevin Twomey, CFO; Stephen Schwartz, senior vice president, investor relations;
Eric Warmstein, senior vice president and director of corporate development; and
H. Rodgin Cohen, a representative of Sullivan & Cromwell, HFA's outside counsel.
Overall, the HFA representatives indicated that the main purpose of the consent
is to place HFA on a "level playing field" with WAMU and any other potential
bidder for GWF. HFA believes that GWF's continuous refusal to negotiate with
HFA is precluding shareholders from considering their offers to purchase GWF.
According to Mr. Rinehart, HFA has "had no contact or response from GWF, and we
were surprised that [GWF] went ahead with the WAMU merger because their offer is
not as attractive as the Ahmanson offer." Mr. Rinehart believes GWF is
reluctant to sell itself to its cross-town rival and that GWF had a negative
reaction to HFA's aggressive offer.
HFA's offer is based on two principles. First, the overlapping branches of the
two thrifts will allow for aggressive cost cutting through branch closings. HFA
plans to close 200 branches if it is successful in the takeover. Many Wall
Street analysts believe this is the key to HFA's offer and that any cost savings
recognized by WAMU in a potential merger with GWF could be surpassed by HFA
because of its overlapping territories. HFA is currently basing its cost
savings estimates on the projected cost savings released by WAMU in its merger
agreement with GWF, but HFA management believes its savings projections and
possible revenue enhancements could significantly increase if it could perform
due diligence on GWF. HFA estimates that its cost savings projections are
consistent with other in-market mergers and that WAMU's cost savings estimates
are generous, in light of the minimal overlaps in the WAMU/GWF territories and
the fact that the WAMU/GWF merger is not "in-market" but more of a market
extension given WAMU's concentration of operations outside of California. HFA
also argues that WAMU's projections of aggressive cost savings in conjunction
with aggressive revenue enhancements is unprecedented.
WAMU and GWF argue that their merger should be considered an in-market merger,
as they have several areas of overlap between GWF's and WAMU's operations. An
in-market merger is one in which both companies have a majority of their
operations in the same market territory, whereas a market extension is one in
which the merger would greatly enhance the market territory of the acquiring
bank. WAMU is currently estimating 75 percent of the HFA cost savings despite
having less than half of the branch overlaps. WAMU and GWF note that only 30
percent of their projected cost savings are derived from projected branch
closings. Additional cost savings will be derived from the closing of
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GWF's headquarters and from closing 100 loan offices. Note that WAMU's
projections are derived from its opportunity to perform due diligence on GWF's
books, while HFA has not had the same opportunity.
Projected Cost Savings by 1999
HFA $454 million or 49 percent of total expenses
WAMU $840 million or 38 percent of total expenses
Avg. in-market trans. 40 percent of total expenses
Avg. market-extension trans. 20 percent of total expenses
The second principle is that HFA plans to buy back stock after the merger in
order to increase share value. According to a press release from HFA, "Ahmanson
assumes $2.8 billion--not $2 billion--in share repurchases, executed at rising
price levels and at slightly more than 12 times cash earnings per share." Its
projections are that if the merger is completed, it will buy back 39 million
shares through 1998 at an average price of approximately $46.00 per share and 17
million shares in 1999 at an average price of approximately $60.00 per share.
According to Mr. Twomey, the consent process is vital to GWF shareholders in
that it will allow shareholders to consider HFA's proposed merger. Mr. Twomey
indicated that the consent vote is for "those interested in the vote going
forward -- not necessarily for the merger that is favored." He continued:
"Shareholders can do themselves a favor by sending a message to the Great
Western Financial board -- to allow them [shareholders] to consider this
merger." HFA believes that its projections in the merger are conservative and
that WAMU's are more liberal.
In our meetings with WAMU CEO Kerry Killinger, his attorneys, and his financial
advisors, Mr. Killinger indicated that he believes WAMU's projections are both
reasonable and achievable. He also indicated that the combination would create
"one of the leading savings institutions in the country." Acquiring GWF would
continue WAMU's aggressive expansion that has taken place over the past several
years. Its acquisition of American Savings Bank six months ago more than
doubled its size, and the proposed GWF deal would double it again. HFA believes
this should be a cause for concern among GWF shareholders and that WAMU
management is not experienced enough at running such a large operation. Mr.
Killinger refutes that notion, indicating WAMU's aggressive growth and
successful integration of its acquisitions. WAMU projected a six-month
integration of American Savings into WAMU and is on-target or ahead of target
with that integration. Because WAMU and GWF have similar computer systems, he
also projected a six-month integration of GWF upon completion of the merger.
Rather than closing overlapping branches, WAMU intends to focus on closing back-
office operations and enhancing GWF
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services with WAMU products. Further, it would continue using the Great Western
name on the branches and will combine "two companies with similar strategic
views."
John Maher, CEO of GWF, along with his attorneys and financial advisors, were
all present during the aforementioned meeting with WAMU. On a separate occasion
ISS also met with Joe Wender, senior director of Goldman Sachs, one of GWF's
financial advisors, and had a telephone conversation with Bill Wood, the lead
independent director from GWF's board. Rather than touting the merits of the
respective offers, the GWF representatives concentrated their presentations on
the actions of the GWF board.
Mr. Maher says that he received the HFA offer on the night of Feb. 17, called
all of the board members, and the next day called a board meeting for Feb. 24.
Mr. Maher contends that without the board's actions to date, the value GWF
shareholders will receive in the merger would not be as high as the current
offers. During the week after the Feb. 24 board meeting, GWF held meetings with
other interested parties, including WAMU but excluding HFA, to discuss the
possibility of a third-party acquisition. On Feb. 25, GWF announced that it was
indefinitely postponing its annual meeting and that it had adopted a severance
plan which would cover all full-time employees in the event of a change of
control at GWF.
GWF stock price analysis: Premiums
- ------------------------ Highest ----------------------
GWF Price Offer Price 1-day 5-day/60 day
--------- ------------- ------ -------------
One day prior to HFA (2/17/97): $34.25 NA NA NA
5-day/60-day ave. (12/17-12/23): $29.90 NA NA NA
Day of HFA offer (2/18/97): $45.00 $47.12-HFA 37.6% 57.6%
Annual meeting canceled (2/25/97): $46.88 $43.58-HFA 27.2% 45.8%
Date of WAMU offer (3/6/97): $46.88 $47.70-WAMU* 39.3% 59.5%
Revised HFA offer (3/19/97): $44.38 $47.55-HFA** 38.8% 59.0%
As of 4/1/97: $41.38 $44.40-HFA*** 29.6% 18.5%
* HFA offer = $42.79
** WAMU offer = $45.45
*** WAMU offer = $43.91
On the day before the original HFA offer, GWF common stock closed at $34.24 per
share. News of the offer brought the GWF stock price up 31 percent, or $10.75,
to $45.00 per share, and HFA's common stock rose $4.38 to $44.88 per share. On
the date the WAMU offer was disclosed, the transaction was worth $47.70 per
share to GWF shareholders. All of the stocks have since retreated due to
uncertainties regarding the deals in the market and an overall decline in the
market, but HFA's most recent offer remains the highest bid based on the closing
stock prices as of April 1. The current HFA offer of $44.40 per share
represents a premium of approximately 29.6 percent over the closing price of GWF
on the day before the original announcement and 48.5 percent over the five-day
average closing price 60 days prior to the announcement. The offer is 2.51x
GWF's book value per share.
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The WAMU offer currently represents a premium of 26.5 percent over the closing
price of GWF on the day before the HFA's original announcement and 44.8 percent
over the five-day average price beginning 60 days prior to the original
announcement. WAMU's current offer is 2.45x GWF's book value per share. Mr.
Maher was emphatic that the GWF board has done nothing contrary to GWF
shareholders' interests since this process began. Mr. Wood concurred,
indicating that the GWF board is committed to the process it has undertaken to
secure the highest value possible for GWF shareholders. Further, he notes that
the board clearly has no bias whether that bid is from WAMU or HFA.
Consent Solicitation
The major provision of HFA's consent solicitation is designed to force GWF to
open its books so that HFA will have the same opportunity to perform due
diligence as WAMU has had. It is also intended to force GWF to keep its annual
meeting within two weeks of its original date (April 22) so that GWF
shareholders will have the opportunity to elect directors prior to the special
meeting that will be held to vote on the proposed merger agreement. HFA has
indicated that if the annual meeting is reinstated as provided in the consent
solicitation, HFA will propose an alternate slate of three directors to be
elected to the GWF board. Note that the election of an alternative slate is not
part of this consent solicitation. HFA has stated its position clearly in its
consent material, noting that "Great Western should cease its delays, listen to
the message its shareholders are sending about our proposal, and commence
discussions with us immediately."
GWF's board met on March 25 to consider the latest HFA offer. Shareholders
should note, however, that GWF believes that HFA's consent solicitation
proposals, "individually and collectively are designed to limit the Great
Western Board's flexibility and alternatives, and to coerce Great Western into
accepting Ahmanson's merger proposal." GWF also asserts that "every action and
every response by the Great Western Board has been taken to further the
interests of Great Western's stockholders and other constituents."
On March 26, the GWF board announced that it remained strongly committed to
completing a deal with WAMU and that it would not meet with HFA to negotiate a
possible deal. HFA expressed its disappointment with GWF's decision and
immediately made public a private letter sent by Mr. Rinehart to the GWF board
on March 24, prior to the board meeting on March 25. The letter refuted several
allegations against HFA's offer, and suggested that HFA and GWF together retain
an independent financial advisor to evaluate both the WAMU offer and the HFA
offer. Mr. Rinehart indicated that if the advisor supported the WAMU offer over
the HFA offer, HFA would withdraw its offer. If
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the advisor was unable to reach a conclusion regarding superiority, the two
offers would be put to a shareholder vote and all parties would abide by the
decision of the shareholders.
Mr. Wender was at the GWF board meeting and indicated that the board and its
financial advisors went through HFA's 12-page letter point by point, considering
the issues raised by HFA. Upon completion of the review and six hours of
discussion, the board decided to "stay the course" with regard to its merger
agreement with WAMU. In its most recent proxy materials, the GWF board
indicated that it believes the merger with WAMU will provide Great Western
shareholders with a superior value opportunity.
At this point, shareholders should keep in mind that they are voting only on the
consent solicitation, not the actual merger agreement. ISS is not currently
making a recommendation favoring either merger proposal. When the WAMU/GWF
merger agreement proxy is mailed, shareholders will have another opportunity to
vote, and shareholders will also have another opportunity to vote on the board
at GWF's annual meeting when it is called. HFA has indicated that the following
proposals are intended to "facilitate the maximization of stockholder value."
The issues requiring a shareholder vote on this consent solicitation are as
follows:
Dissident Proxy (WHITE Card)
[_] ITEM 1: CONSIDER MERGER PROPOSAL
Item 1 seeks shareholder approval of a nonbinding resolution that will require
the board to provide the same nonpublic information given to WAMU to any company
making a bona fide merger proposal to GWF. The proposal would also require that
the GWF board participate in discussions and negotiations with any party making
such an offer and consider each bona fide merger proposal made.
This proposal and the proposal in Item 3 below are the main concern of HFA at
this point. While the proposal is nonbinding, HFA believes a positive vote of
shareholders would send a clear message to the GWF board that shareholders want
the HFA offer to be considered and believe that the GWF board will take that
message into consideration when reviewing the HFA proposal.
While we are not favoring one deal over another, we believe shareholders should
have the right to have a competing offer thoroughly considered by the board. We
also believe that entering into negotiations with HFA would not necessarily
change GWF's position regarding its merger agreement with WAMU. However, by
allowing HFA access to the same information that was provided to WAMU and the
other suitors that GWF considered after the initial hostile bid, HFA may be able
to solidify its proposal to GWF using more
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accurate numbers from GWF. From the onset, the GWF board has rebuffed HFA's
attempts to be placed on a level playing field with any other bidder.
While we agree that the offer prices may not have reached the same levels
without the process used by the GWF board to date, both sides seem to be at an
impasse with regard to bidding. Allowing HFA to carry out a due diligence
process may prove beneficial with regard to HFA's offer and may force a higher
offer from WAMU should HFA's proposal begin to look better after due diligence.
The proposal does not ask that the GWF board agree to merge with HFA, but only
that it agree to negotiate. As it has negotiated with other parties, we do not
believe such discussions would negatively impact the company.
We recommend that shareholders CONSENT to Item 1.
[_] ITEM 2: AMEND ARTICLES/BYLAWS/CHARTER TO REMOVE ANTITAKEOVER PROVISIONS
This proposal seeks shareholder approval of a nonbinding resolution that would
urge the board not to grant any merger-related breakup fee, "crown jewel
option," or other lock-up agreement that would exceed a value of $100 million
without shareholder approval. HFA is currently challenging the WAMU/GWF
termination fee (which could be valued at $195 million) in court, contending
that the fee is excessive. Because the fee has been agreed upon prior to the
proposal, HFA's proposal is intended to send a message to the GWF board to take
the views of a majority of shareholders into consideration when entering into
such agreements.
We do not believe the arbitrary cap on the breakup fee is necessary, nor would
it be practical to call a vote of shareholders prior to negotiating a merger
agreement solely to determine the level of fees necessary to adequately
compensate one party in the case of a termination of the agreement. This is a
decision best left to management when it is entering into confidential merger
negotiations.
Further, without the termination fee applicable in this merger, GWF may not have
been able to convince WAMU to enter into negotiations. HFA believes the fees
are excessive, but without WAMU's entrance into this contest, GWF shareholders
would have been facing a hostile offer from HFA for 1.05 shares of HFA common
stock rather than 0.9 WAMU shares or 1.2 shares.
We recommend that shareholders REVOKE CONSENT for Item 2.
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[_] ITEM 3: CHANGE DATE/TIME OF ANNUAL MEETING
This proposal seeks shareholder approval of an amendment to the company's bylaws
that would require GWF to hold its annual meeting on the fourth Tuesday in
April, or on a date within 14 days of that date. HFA believes the amendment
would preclude GWF from continuing to postpone its annual meeting and would
force the election of GWF directors prior to shareholder consideration of any
merger agreement. HFA intends to nominate three directors to the GWF board upon
the calling of the annual meeting. The provision would allow GWF shareholders
to consider the election of three HFA-related directors to the GWF board prior
to the consideration of any merger agreement.
GWF intends to call a special meeting as soon as possible to vote on the merger
with WAMU and then call an annual meeting to elect directors after the special
meeting. Presumably, GWF believes that if shareholders do not support the WAMU
merger agreement, they will not support it at the special meeting. HFA,
however, believes that shareholders will have ample time between now and April
22, or 14 days after that date, to receive all requisite information in order to
vote on the proposed HFA nominees for election to the GWF board. GWF disagrees,
believing this situation is fluid and that shareholders should not be rushed
into making decisions at this point.
Coinciding with our belief that GWF should begin negotiations with HFA or any
other suitor with a bona fide offer on the table, we believe the annual election
of directors will allow shareholders to voice their opinion regarding their
confidence in the current GWF board's actions thus far. If shareholders believe
the GWF board has been protecting their interests, they will reelect the GWF
directors at an annual meeting. By indefinitely postponing its annual meeting,
the GWF board is manipulating the process of annual elections to push the
progress of its merger with WAMU regardless of any other offer. While we
believe the GWF board has added significant value for shareholders to date, we
also believe both HFA and WAMU are coming close to the end of their reasonable
bidding limits and that negotiations with HFA will benefit shareholders. If GWF
continues to resist HFA's offers and shareholders believe they are not being
treated fairly, having the annual election of directors prior to the special
meeting will be the only way shareholders can voice their opinion regarding the
mergers prior to voting on the WAMU deal.
We recommend that shareholders CONSENT to Item 3.
[_] ITEM 4: AMEND ARTICLES/BYLAWS/CHARTER TO REMOVE ANTITAKEOVER PROVISIONS
This proposal would amend the GWF bylaws to provide that the holders of a
majority of the stock having voting power, in person or by proxy, shall
constitute a quorum. If no
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quorum is present, the presiding officer or the shareholders present can adjourn
the meeting. However, if a quorum is present, the presiding officer may not
adjourn the meeting until all business properly brought before such meeting has
been acted upon by shareholders.
As a matter of policy, ISS recommends that shareholders vote against any
adjournment of a shareholders' meeting unless such adjournment is necessary to
ensure their financial interests. Adjourning meetings to resolicit votes or to
delay shareholder action is expensive, and by the time a meeting is called,
shareholders have sufficient information to make an informed decision regarding
any action taken by management that has been properly brought before
shareholders. If a quorum of shareholders is present at a meeting or represented
by proxy, we believe management should not adjourn the meeting until all
business has been acted upon by shareholders.
We recommend that shareholders CONSENT to Item 4.
[_] ITEM 5: REQUIRE SHAREHOLDER APPROVAL OF CERTAIN BYLAW AMENDMENTS
This proposal seeks shareholder approval of an amendment to GWF's bylaws that
would prohibit any of the bylaw amendments adopted by shareholders pursuant to
this consent solicitation to be amended or repealed without the affirmative vote
of a majority of company's shareholders.
Because it will take a majority vote to implement the proposed bylaw amendments,
we believe shareholders should have the right to amend or repeal such
amendments, in their sole discretion, by a simple majority vote. We further
believe that management should not be able to amend the company's bylaws without
a majority vote of shareholders. This proposal would ensure that shareholders'
opinions and decrees would be implemented until shareholders believe the
provisions of those bylaws are no longer necessary.
We recommend that shareholders CONSENT to Item 5.
MANAGEMENT PROXY (BLUE CARD)
[_] ITEM 1: CONSIDER MERGER PROPOSAL
CONSENT; see Item 1 above.
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[_] ITEM 2: AMEND ARTICLES/BYLAWS/CHARTER TO REMOVE ANTITAKEOVER PROVISIONS
REVOKE CONSENT; see Item 2 above
[_] ITEM 3: CHANGE DATE/TIME OF ANNUAL MEETING
CONSENT; see Item 3 above.
[_] ITEM 4: AMEND ARTICLES/BYLAWS/CHARTER TO REMOVE ANTITAKEOVER PROVISIONS
CONSENT; see Item 4 above.
[_] ITEM 5: REQUIRE SHAREHOLDER APPROVAL OF CERTAIN BYLAW AMENDMENTS
CONSENT; see Item 5 above.
__________________________
Great Western Financial Corp.
9200 Oakdale Avenue
Chatsworth, California 91311-6519
(818) 775-3411
COMPANY SOLICITOR: Georgeson & Co. (800) 223-2064
DISSIDENT SOLICITOR: MacKenzie Partners, Inc. (800) 322-2885
SHAREHOLDER PROPOSAL DEADLINE: November 21, 1997
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This proxy analysis has not been submitted to, or received approval from, the
Securities and Exchange Commission. While ISS exercised due care in compiling
this analysis, we make no warranty, express or implied, regarding the accuracy,
completeness, or usefulness of this information and assume no liability with
respect to the consequences of relying on this information for investment or
other purposes.
ENDNOTES
1. Mr. Gryp is a former executive officer of the company. Source: Great
Western Financial Corp. 1997 Proxy Statement, p. 17.
2. Mr. Montgomery is a former president and CEO of the company. Source: Great
Western Financial Corp. 1997 Proxy Statement, p. 4.