Ahmanson to buy Coast Savings, creating nation's second-largest thrift
Oct. 07, 1997
LOS ANGELES (AP) _ Rebuffed in its bid to create the nation's largest thrift, H.F. Ahmanson & Co. said Monday it will acquire Coast Savings Financial Inc. in a $900 million stock deal that will make it the second-biggest player in the thrift industry.
The friendly acquisition between Ahmanson, parent of Home Savings of America, and Coast, parent of Coast Federal Bank, creates a financial institution with $56.6 billion in assets.
Rumored for months, it comes after Ahmanson's failed attempt to take over Great Western Financial Corp., also of Los Angeles. Great Western rebuffed Ahmanson in favor of a white knight bid from Washington Mutual Inc. That merger, completed in July, produced the nation's largest thrift with more than $88 billion in assets.
``Great Western would have been a much stronger, much larger acquisition, so this is probably a lot more easily managed,'' said David Hochstim, an analyst with Bear, Stearns & Co. in New York. Even though Coast is smaller, he said, the deal still ``adds to Ahmanson's earnings and increases their market presence.''
With $39.2 billion in deposits, the combined institutions will serve more than 2 million households through 460 financial service centers in California, Florida and Texas. Home Savings' share of California's retail deposit market will increase to 9.1 percent from 7.5 percent.
That strengthens the bank's position behind other major players in the state, including Bank of America, with about 20 percent of retail depositors, and Wells Fargo, with about 15 percent.
``It's very significant. I think Ahmanson had tried to force its way down to the altar and didn't make it all the way down. This is a way for them to make it to the altar and give them a meaningful market presence again,'' said Gareth Plank, an analyst with UBS Securities.
Coast Savings closed up 4.81 1/4 at $58.81 1/4 on the New York Stock Exchange. Ahmanson was up $1.50 at $58.62 1/2, also on the NYSE.
``This transaction is also consistent with our desire to build shareholder value,'' said Ahmanson chairman and chief executive officer Charles R. Rhinehart.
The acquisition was not a defensive move to fend off possible hostile takeover bids against Ahmanson, said Rhinehart. He did not rule out further acquisitions.
Some layoffs were anticipated, but the number was expected to be small, partly because there was little overlap in operations, said Bruce G. Willison, president and chief operating officer. Also, Ahmanson has 500 unfilled positions that will be offered to Coast employees who otherwise would be laid off.
Fifty Coast and Home Savings branches within a mile of one another were being studied for possible closure.
Coast shareholders will receive .8082 share of Ahmanson common stock for each share of Coast common stock. In addition, they get any proceeds, after taxes, from Coast's pending litigation against the U.S. government.
The merger, which is expected to close in the first quarter of 1998, is still subject to regulatory approval. The deal was signed early Monday, Ahmanson spokeswoman Mary Trigg said.