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Washington Mutual Eyes Lender

Mergers: Mortgage firm Long Beach Financial could sell for between $318 million and $380 million, analysts say.

May 19, 1999|EDMUND SANDERS | TIMES STAFF WRITER

Long Beach Financial Corp., a fast-growing mortgage lender catering to borrowers with bad credit, has become the latest takeover target in the rapidly consolidating home loan industry.

Analysts said Tuesday that Washington Mutual, the nation's largest thrift, appears to be mulling over a purchase of the Orange-based company, which they said could sell for between $318 million and $380 million.

Officials at both companies declined to comment.

In an interview last month, Long Beach Financial Chairman M. Jack Mayesh said the company was not actively seeking a buyer and had recently adopted a shareholder rights plan to discourage a hostile takeover. But Mayesh confirmed that the company has been receiving inquiries about whether it is interested in selling.

"At the right price, we'd have a fiduciary duty to consider it," he said.

Washington Mutual is known to have a strong interest in California. Over the last 2 1/2 years, the thrift has acquired some of the state's largest financial institutions, including Great Western Bank and Home Savings & Loan.

Long Beach Financial has 866 employees nationwide.

Investors on Wall Street seemed unimpressed by the latest takeover speculation. The stock closed Tuesday at $12.31 a share, up 19 cents. But since the takeover speculation began to circulate in April, the stock has risen nearly 45%.

A purchase by Seattle-based Washington Mutual would be further evidence of the growing interest by traditional banks and thrifts in the risky but profitable business of making loans to borrowers with credit problems, also known as sub-prime lending.

Last year, Minneapolis-based U.S. Bancorp acquired a 19% stake in Long Beach Financial's rival, New Century Financial Corp. in Irvine.

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