Washington Mutual Inc. almost missed out on buying Irvine-based Commercial Capital Bancorp Inc.
Another suitor was in the wings and nearly snatched up the local thrift back in April. That’s when Washington Mutual made an 11th hour bid in which the Seattle-based thrift’s top executive personally intervened.
The result: Washington Mutual’s $983 million offer for Commercial Capital in late April, just two months after officials from the mega thrift told Commercial Capital they weren’t interested in pursuing an acquisition.
The sequence of events on how the Washington Mutual deal came about were outlined in recent filings with the Securities and Exchange Commission.
Wachovia?
Who the other suitor was isn’t known.
Some analysts have pointed to Wachovia Corp.
Only a few weeks later, in early May, Wachovia said it was buying Oakland’s Golden West Financial Corp. for $25 billion.
Earlier this year, Wachovia bought Irvine-based bank holding company Westcorp Inc. and its auto finance unit WFS Financial Inc. for $4 billion.
Commercial Capital started looking for a buyer in late 2005, according to the filing. The thrift hired representatives from Credit Suisse Securities USA LLC and Sandler O’Neill & Partners LP as advisers.
Executives at Commercial Capital, which is led by Chief Executive Stephen Gordon, felt Wall Street was undervaluing their company amid rising interest rates.
The thrift specializes in loans to owners of apartment and commercial buildings. Shares of Commercial Capital are off nearly 40% in the past year with a recent market value of about $950 million.
Suitors Contacted
More than a dozen possible buyers were contacted, including Washington Mutual. Gordon and David DiPillo, president and chief operating officer, held initial talks with three undisclosed suitors.
When first contacted in February, Washington Mutual indicated it wasn’t interested.
On April 12, Commercial Capital entered into a non-binding letter with the unnamed suitor.
The next day, Commercial Capital’s board met and agreed to allow talks on a buyout as the thrift continued to evaluate its projected 2006 earnings and whether it made sense to stay independent or be bought.
Two days later, a Washington Mutual official contacted Commercial Capital to feel out interest in a possible acquisition.
CEOs Talk
By that evening, Washington Mutual Chief Executive Kerry Killinger and Gordon had spoken.
Killinger signed a letter offering a price better than the unnamed suitor’s proposed offer.
He also indicated a transaction could be negotiated within a week.
During the next several days, talks were held with Washington Mutual and the other suitor to come up with the best offer.
Valuations of recent acquisitions were considered in determining the fairness of offers, according to the filings.
On April 23, Commercial Capital approved Washington Mutual’s $16 a share offer, which was about 13% higher than Commercial Capital’s closing price before the deal.
Gordon’s Stake
Terms include a $40 million termination fee to be paid by Commercial Capital if the thrift decides not to proceed with the acquisition.
Washington Mutual agreed to pay up to $65 million in change-in control benefits and other payments to senior executives of Commercial Capital.
Gordon is set to share in that. He owns about 5 million shares and holds rights to another 1 million in options.
His stake is worth about $90 million in the buyout.
A special meeting of stockholders has been set for July 25 in Irvine.
The thrifts hope to close the deal in the late third quarter or early fourth quarter.
