SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
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
/ / Definitive proxy statement Rule 14a-6(e)(2))
/ / Definitive additional materials
/x/ Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
GREAT WESTERN FINANCIAL CORPORATION
(Name of Registrant as Specified in Its Charter)
H. F. AHMANSON & COMPANY
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/x/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / 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:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
[H. F. Ahmanson & Company LETTERHEAD]
May 27, 1997
Institutional Shareholder Services
7200 Wisconsin Avenue, Suite 1001
Bethesda, Maryland 20814
Attn: Mr. Peter Gleason
Dear Sirs:
We have read with dismay the "Summary of Issues" and "Executive Summary"
presented to you on May 22, 1997 by Great Western Financial Corporation. In
the view of H. F. Ahmanson & Company, those submissions contained so many
errors and were so unbalanced as to illustrate why it is essential that the
Ahmanson nominees be elected. The following is a partial list of the errors
and omissions that Ahmanson believes these Great Western submissions contain.
Great Western's Claim Ahmanson's Response
1. It is "not credible" that 1. Great Western did not tell you:
Ahmanson's nominees will not be (a) The nominees have contractually
controlled by or acting at the -------------
direction of Ahmanson. agreed that they will not be acting
------
at the direction of Ahmanson.
(b) As a matter of state law (as
----- ---
acknowledged in an amendment to Great
Western registration statement), the
nominees must act in the interest of
all Great Western stockholders.
(c) The Ahmanson nominees are highly
respected professionals who have no
personal or financial interest in an
Ahmanson/Great Western merger.
(d) During deposition testimony,
both of the outside
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Institutional Shareholder Services -2-
directors of Great Western who were
deposed conceded that they had no
reason to believe that the Ahmanson
nominees would not comply with their
fiduciary duties.
2. The "Great Western Board has done 2. (a) In our view, it is contrary
exactly what a Board should do in to shareholder interests for a board
responding to a bid for a company." to create an unlevel playing field
when presented with two bona fide
---- ----
proposals. We believe that there is
no judicial support for this course
of action.
(b) Great Western does not deny that
it has created an unlevel playing
field.
(c) How can the following actions by
the Great Western board have enhanced
shareholder value:
* Sought a higher bid from
multiple parties, but not from
Ahmanson.
* Entered into formal discussions
and solicited formal proposals with
more than one party, but not with
Ahmanson.
* Provided material information to
more than one party, but not to
Ahmanson.
* Sharply criticized Ahmanson
before the regulators and argued that
its application should be rejected.
* Sharply criticized Ahmanson in
the media and to investors.
* Reached a conclusion as to the
superiority of WAMU without due
diligence on Ahmanson.
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Institutional Shareholder Services -3-
3. "The Washington Mutual merger 3. The original Ahmanson proposal
delivered almost $700 million of delivered over $1,750 million of
additional value to Great Western additional value to Great Western
stockholders." stockholders and the enhanced
Ahmanson proposal delivered hundreds
of millions of additional value; yet,
the Great Western board refused to
discuss formally or informally either
proposal.
4. "Without the Washington Mutual 4. This is speculation without basis
merger, Great Western stockholders in fact and makes the extraordinary
today would have an Ahmanson proposal assumption that Ahmanson would not
for 1.05 shares." have increased its original proposal
if it had been accorded an
opportunity to conduct due diligence
and to enter into discussions with
Great Western. In fact, it would be
highly unusual, indeed extraordinary,
for an initial unsolicited offer to
represent the last and best offer,
and any assumption to the contrary
suggests that Great Western was
uninformed. In any event, Great
Western made no effort to determine
whether the assumption was accurate.
5. Great Western's board is 5. (a) These directors have
overwhelmingly comprised of publicly stated that they are
"independent directors." "committed" to the Washington Mutual
merger.
(b) These directors have very large,
highly preferential loans from Great
Western which are very unusual (and
possibly unique) among major
financial institutions.
(c) In deposition testimony, these
directors acknowledged that they
relied, to what Ahmanson believes is
a highly
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Institutional Shareholder Services -4-
unusual extent, on the advice of
outside advisors.
6. The Great Western Board has acted 6. In Ahmanson's view, a board
reasonably [and] rationally ... in cannot act reasonably and rationally
determining that the Washington to make such a determination without
Mutual is the superior merger discussions with and due diligence
partner. regarding all parties making bona
--- ----
fide proposals.
----
7. Great Western agreed to a 7. (a) The no shop clause is
"standard 'no shop' clause". unusual because it permits
-------- discussions if there is only a
(Emphasis added.) "reasonable possibility" that a
failure to do so would violate
fiduciary duties.
(b) Great Western has never
disclosed whether it believed that
there was not such a "reasonable
possibility" and, if so, the basis
for that conclusion.
8. "The Great Western's board 8. (a) Ahmanson believes that this
decision not to enter into decision cannot fairly be
discussions with Ahmanson is both characterized as reasonable or
reasonable and rational and rational, and, because of the
consistent with [its] obligations importance of this issue, it is
---------- discussed in more detail below.
under the ... merger agreement." (b) Great Western avoids saying that
(Emphasis added.) ------
it was prohibited by the merger
----------
agreement from holding discussions
with Ahmanson.
9. In the event that the Washington 9. Ahmanson believes that the Great
Mutual merger is rejected, the Western Board's independence in those
available options should be examined circumstances is placed in question
by Great Western's "independent" when it has publicly stated it is
Board. "committed" to Washington Mutual.
Great Western's position coerces its
stockholders to accept the Washington
Mutual proposal for
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Institutional Shareholder Services -5-
fear that the Great Western Board
will obstruct any alternative merger
proposal.
10. There is no reason to question 10. (a) Fundamental questions about
the motives or decisions of Great the decisions of Great Western's
Western's board. board are raised by its creation of
an unlevel playing field and its
failure to enter into any discussions
with Ahmanson.
(b) Deposition testimony indicates
that the Great Western Board was not
informed about key issues relating to
the timing of the meeting for the
election of directors.
(c) Many of the reasons cited by the
Great Western Board for supporting
Washington Mutual are, Ahmanson
believes, clearly incorrect or
lacking balance.
11. The proposed by-law amendments 11. The by-law amendments were
"are in Ahmanson's interests, not the designed by Ahmanson to protect
interests of Great Western's against efforts by Great Western to
shareholders". prevent the Ahmanson nominees, if
elected, from being able to
participate fully in the Board
processes.
12. "If the [Washington Mutual] 12. Even if the Ahmanson nominees
merger is not approved, Ahmanson were controlled by Ahmanson--which
should not be permitted to dictate or they are not--Ahmanson could not
influence the Board's further "dictate" any responses with only 3
responses." of 11 directors.
13. "'Tone'". "Great Western is 13. Great Western has sharply
simply pursuing a strategic merger criticized Ahmanson's management,
... [while] Ahmanson has attacked the capital, technology, and business
Great Western merger on every front." strategy, among other things, in
comment letters to the regulators, in
the media and to investors.
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Institutional Shareholder Services -6-
14. "Any confusion that may exist in 14. Ahmanson prevailed in the
connection with Ahmanson's consent consent solicitation on the three
solicitation results from Ahmanson's proposals that were certified. This
own actions." is an incontrovertible fact that
----
Ahmanson had no motivation to
confuse.
15. "Ahmanson intentionally refused 15. (a) Ahmanson believes that the
to cause a record date to be set for proper record date was set and that
two ... consent resolutions. It Great Western's refusal to
could easily have done so." acknowledge this record date has
prevented a certification of the vote
on these resolutions.
(b) Ahmanson had no reason to
prevent or delay a certification on
proposal number one (urging
discussions and the creation of a
level playing field).
(c) Based on Great Western's actions
in setting the original record date,
Ahmanson believed that Great Western
would have delayed setting a new
record date for 20 days (pursuant to
the by-law adopted after Ahmanson's
consent solicitation was announced),
and thereby delayed the ability of
Great Western stockholders to express
their views.
16. "The Annual Meeting was delayed 16. (a) Great Western delayed the
until the situation stabilized and Annual Meeting by 7 1/2 weeks from
shareholders could make informed its originally scheduled date.
decisions." (b) Why did it take the Great
Western Board 7 weeks from the time
of the original Ahmanson offer, and
3 1/2 weeks from the time of the
enhanced offer, to even consider
scheduling a meeting?
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Institutional Shareholder Services -7-
(c) What "additional information"
was required?
(d) How did the "stabilization"
occur on April 10?
(e) Deposition testimony indicates
that the Great Western Board made no
inquiry or effort between February 24
and April 10 to determine whether the
situation had stabilized and the
shareholders could make informed
decisions.
(f) In deposition testimony, the
Great Western chief executive officer
conceded that after the March 6
announcement of the WAMU merger,
there was no additional information
required and no reason for further
delay.
(g) Deposition testimony indicates
that the Great Western Board was not
informed of, and did not inquire
about, the existing by-law provision
requiring Great Western to call a
special meeting to elect directors
"as soon as practicable".
(h) Deposition testimony indicates
that the Great Western Board was not
informed of, and did not inquire
about, the exceptions to the SEC's
proxy rules that would have permitted
the meeting to elect directors to be
held at an earlier date.
(i) Great Western has not disclosed
whether there was any connection
between (1) the Board's decision, at
a hastily-called board meeting on
April 10, to schedule the annual
meeting and (2) Ahmanson's
announcement the prior
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Institutional Shareholder Services -8-
day that it had received sufficient
consents for its proposal to require
the election of directors to be held
no later than May 6.
17. Ahmanson Proposal utilizes 17. (a) Who (other than Great
questionable assumptions. Western and Washington Mutual) has
questioned Ahmanson's assumptions?
(b) The Washington Mutual Proposal
assumes that it can generate revenue
enhancements and cost savings equal
to about 136% of Great Western's 1996
"core earnings" (as defined by Great
Western) -- which Ahmanson believes
is far in excess of the ratio of
projected revenue enhancements and
cost savings to net income used in
any other merger.
18. Ahmanson relies on "imprudent 18. (a) Ahmanson's thrift
leverage". subsidiary is well capitalized as
defined by regulations of the Office
of Thrift Supervision.
(b) Neither national credit rating
agency downgraded Ahmanson after the
announcement of its enhanced offer.
(c) One national credit rating
agency ranks Ahmanson's long-term
debt higher than Washington Mutual.
19. "WAMU has a proven track record 19. WAMU has completed the
of successfully integrating large integration of only one company that
----- is 2% as large, and that company was
acquisitions." (Emphasis added.) less than 10% of the size of Great
Western.
20. "Significant growth in net 20. These retained loan originations
interest income driven by high (including significant fixed rate
projected loan originations at rather
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Institutional Shareholder Services -9-
reasonable margins." than adjustable rate mortgage loans)
are projected to be funded with
wholesale liabilities, creating
interest rate risk.
21. Will rank in top three ... in 21. A combined WAMU-Great Western
California ... and 5th in Florida. will trail far behind the top two in
California and the top four in
Florida.
22. "A faster solution ... is 22. (a) If the WAMU merger is
better .... WAMU is on track for a defeated, we believe that Ahmanson
closing in late June or early July." should be able to close its exchange
offer shortly thereafter, and
Ahmanson is on a time track similar
to that of WAMU.
(b) Ahmanson's application has been
deemed complete by the OTS.
23. Ahmanson's earnings are 23. (a) Ahmanson's cost savings are
significantly more sensitive to in line with other in-market mergers,
achieving the stated cost savings while WAMU's projected cost savings
targets than are WAMU's. and revenue enhancements considerably
exceed those in other mergers.
(b) WAMU's earnings are
significantly more sensitive to
achieving the stated revenue
enhancement targets than are
Ahmanson's.
24. Ahmanson made significant 24. (a) These revisions largely
changes in its operating assumptions reflected the additional information
when it increased its bid. regarding Great Western which became
available when WAMU finally filed its
registration statement. Great
Western fails to state that
Washington Mutual also made
significant changes to its operating
assumptions between the announcement
of the
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Institutional Shareholder Services -10-
merger and the filing of its
registration statement.
(b) In Ahmanson's view, these
circumstances illustrate why Great
Western has failed to promote the
best interests of its stockholders
when it has refused to provide
information to Ahmanson and enter
into discussions with Ahmanson.
25. Ahmanson will have one of the 25. (a) The tangible common equity
lowest tangible common equity ratios. ratio selected by Great Western is
not used by the regulators to
evaluate capital strength.
(b) Ahmanson's pro forma regulatory
--- -----
capital ratios (which apply at the
thrift level) are equivalent to those
of WAMU.
(c) WAMU's pro forma tangible common
--- -----
equity places it in the lowest decile
in the industry.
26. GWF shareholders will receive 26. (a) These conclusions are
greater earnings and higher growth speculative and based on projections
rates in a WAMU transaction than in made by WAMU. If Ahmanson's
an Ahmanson transaction. projections are used, GWF
shareholders will receive greater
earnings and higher growth rates in a
merger with Ahmanson.
(b) Based on Ahmanson's projections,
Great Western shareholders will
receive considerably greater cash
earnings per share in an Ahmanson
merger.
The Executive Summary also included two tables, not included in proxy
material reviewed by the SEC, that are apparently designed to indicate the
financial superiority of the WAMU proposal. We believe that these tables are
seriously misleading.
<PAGE>
Institutional Shareholder Services -11-
The first table shows eight selected trading dates (spaced an unusual 13
or 11 days apart) and purports to show that the WAMU offer had a higher market
value on one-half of those dates. Even if the data used in that table were
accurate -- which it is not -- we believe that the table is misleading because
on the vast majority of all trading days the current Ahmanson offer has had a
---
higher value than the WAMU offer. This is the case whether the relevant
period is deemed to begin with Ahmanson's original offer, WAMU's offer or
Ahmanson's enhanced offer. (Indeed, even if the period begins with WAMU's
offer and Ahmanson's original exchange ratio is used until it enhanced its
offer, the Ahmanson offer would still be higher on over two-thirds of the
trading dates.)
Great Western's use of Ahmanson's original exchange ratio for three of
the trading dates (February 18, March 3 and March 14) is misleading because it
has no relevance to the current offer. If the current offer is used,
Ahmanson's proposal had a higher market value on 7 (not 4) of the 8 dates.
Moreover, there can be absolutely no justification for the "apples to
oranges" comparison on February 18 and March 3. If Great Western argues that
Ahmanson's original exchange ratio should be used on those dates because that
was the offer then extant, then the column for WAMU should read "0", because
WAMU had no offer extant on that date.
--
The second table purports to show that the WAMU offer will increase in
superiority if the stocks of both WAMU and Ahmanson increase in equivalent
percentage increments because of the "collar effect" of the Ahmanson offer. We
believe that this table is misleading in two respects.
First, if the increase occurs after a merger is consummated, the
Ahmanson exchange ratio will not decline. The exchange ratio will be fixed
before consummation. This point may seem obvious, but it is quite important
because it is unlikely that either stock will appreciate by 10% or 15% (two of
Great Western's four scenarios) between now and closing.
Second, even if the appreciation occurs before consummation, the table
fails to provide the correct valuation because the Ahmanson exchange ratio is
based on an average price.
The following example may prove helpful to illustrate this second point.
Assume that the merger closes 20 trading dates
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Institutional Shareholder Services -12-
from Friday and that the Ahmanson stock increases in equal increments from
Friday's close of $40.50 to a price of $42.92 on the closing date (the 5%
appreciation suggested by Great Western). The exchange rates would then still
be 1.20 - and not the 1.16 used by Great Western.
As mentioned above, Great Western has attempted to justify its policy of
no discussions with Ahmanson on the basis that it enabled Great Western to
increase value for its stockholders by encouraging both Ahmanson and
Washington Mutual to increase their bids. Because the propriety of Great
Western's no-discussion policy is so central to the question of the Great
Western Board's overall conduct, we believe that a detailed analysis of this
purported justification may be helpful. For the reasons set forth below, we
believe that this justification is clearly wrong.
First, even if a no-discussion policy could possibly be justified as
promoting an improved bid from Ahmanson, we believe that Great Western's other
actions demonstrate that its interest is in driving Ahmanson out of the
bidding altogether rather than driving Ahmanson to a higher bid. For example,
Great Western has filed numerous lengthy comment letters with the Office of
Thrift Supervision (the "OTS") urging that it reject Ahmanson's application.
If the OTS rejected the application, Ahmanson could obviously not proceed.
Moreover, Great Western has publicly and privately urged Ahmanson to withdraw
its offer and has attempted to reinforce that effort with a publicity campaign
that has been sharply critical of Ahmanson. We believe that this would not be
the approach of a company seeking a higher bid from Ahmanson.
Second, this purported justification for a no-discussion policy has not
been made in any public forum of which we are aware. It is not in Great
Western's proxy statement or Washington Mutual's registration statement.
Third, we believe that it is totally illogical to suggest that WAMU
would increase its bid because Great Western refuses to talk to Ahmanson.
Indeed, we believe it likely that the single factor which has probably been
most instrumental in WAMU not increasing its bid has been Great Western's
---
total commitment to WAMU. This support has reduced any incentive for WAMU to
increase its bid. Moreover, even if WAMU made the bid it did because of Great
Western's pledge not to hold discussions with Ahmanson (and we are aware of no
evidence to that effect), that cannot explain Great Western's refusal to hold
discussions with Ahmanson either before WAMU made its final bid or after the
bid
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Institutional Shareholder Services -13-
(as we believe is permitted by the terms of the merger agreement and
consistent with its fiduciary duties).
Fourth, we believe that it is likewise illogical that the absence of
discussions would encourage Ahmanson to raise its bid. Indeed, the very
absence of information restrained Ahmanson from a higher bid both because it
is uncertain whether any undisclosed problems exist at Great Western and
because Ahmanson is unable to ascertain whether there are greater
opportunities for revenue enhancements, cost savings and credit cost
reductions than presently anticipated. It is instructive that Ahmanson was
able to increase its bid in March as a result of disclosures about Great
Western in the WAMU registration statement.
In conclusion, Ahmanson trusts that when all the above-described facts
are recognized, the need for Great Western directors not committed to a WAMU
merger and the merits of the Ahmanson offer becomes even more apparent. On
behalf of Ahmanson, we are most appreciative of your consideration of this
response.
Very truly yours,
/s/ Kevin M. Twomey
Kevin M. Twomey
Senior Executive Vice President
and Chief Financial Officer
<PAGE>
Institutional Shareholder Services -14-
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 non-binding resolutions
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 May 23, 1997, Ahmanson is the beneficial owner of 3,560,500 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 May 23, 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 May 23, 1997, CSFB held a net
long position of 15,452 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.
