Depends on who you talk to or listen to. Sheik always says that happened, the Gagnes always said it didn't.
Wouldn't surprise me if it did happen, but I often wonder if it was an offer thrown out in pure anger that Verne didn't really mean. Sheik hadn't even spent any time in the AWA since the late 70's and I get there is a loyalty factor there, but it isn't like Verne would have been reaching out to someone freshly stolen.
EDIT: I also don't doubt that Sheik could have hurt Hogan if he was of the mind to, but really, in a pro wres match, anyone could do that if their opponent didn't suspect anything. Same as Hogan could have hurt Sheik badly had the situation been reversed and Sheik didn't suspect anything was amiss.