Posted at 11:30 a.m., Monday, May 7, 2001

Stock soars after offer for First Hawaiian parent

By Frank Cho
Advertiser Staff Writer

Investors sent the stock price of Bancwest Corp. soaring nearly 40 percent today on news that BNP Pari bas SA, France's biggest bank, is offering to buy the Honolulu company for about $2.5 billion.

The share price for Banc-West, the parent company of First Hawaiian Bank and San Francisco-based Bank of the West, closed at $34.31, up 39 percent from Friday's closing price of $24.98. Trading totaled 3.1 million shares, more than 30 times its daily average of around 92,000 shares.

The Paris-based bank, the biggest single shareholder of BancWest Corp. with 45 percent of outstanding stock, said last night it plans to buy the 55 percent it does not already own for $35 a share in cash. The offer represents a 40 percent premium over BancWest's Friday close.

"Whatever way you want to look at this, it is a very good price," said David Winton, a New York-based bank analyst with Keefe Bruyette & Woods Inc., of the offer.

The deal values the Honolulu-based bank at 2.13 times book value, comparable with recent U.S. commercial bank takeovers, according to Bloomberg News. An outside committee of BancWest directors has recommended the bank's board approve the proposal.

BancWest's full board is expected to meet later today in Honolulu to consider the proposal.

"I am pleased that our special committee is recommending that our board approve the proposal," said Walter A. Dods Jr., chairman and chief executive of Banc-West, in a statement. "It seems to be a compelling one that would be in the best interests of all of our public stockholders ... as well as our customers, our community and our employees."

If approved by the board, the deal would need shareholder and regulatory approval.

It is not expected to affect current operations of Bank of the West and First Hawaiian Bank. Dods is expected to remain chief executive, and BancWest, formerly First Hawaiian Inc., is expected to remain headquartered in Hawai'i.

"With the bank's stock trading at near the offering prices, the market is telling you that this is a done deal," said Brock Vandervliet, a banking analyst with Lehman Brothers in New York.

BNP currently holds 45 percent of outstanding common stock of BancWest as a result of the merger between First Hawaiian Inc. and the parent company of Bank of the West.

Under terms of that agreement, BNP is not permitted to submit a business combination proposal without the consent of a majority of BancWest's independent directors. BancWest's independent directors authorized BNP to submit its proposal.

"With the slowdown in the U.S., banks are probably cheaper at the moment than they have been for a while," said Philippe Leonnard, a banking analyst at Fortis Securities France, who has a "buy" rating on BNP Paribas shares. "It's good timing."

Banking analysts said BNP has wanted to expand its retail banking business internationally, and acquiring BancWest is one way to do it without much risk.

"If you are in Paris and watching the stock price of BWE (BancWest) going up and up and up, that creates all the reason you need to pick up the phone and make the call to buy the rest of the bank," Winton said.

BancWest "is a company, a market and a management we know," said BNP Paribas chief operating officer Baudouin Prot. "The risk to shareholders in, say, emerging markets is much greater than in the U.S."

BNP Paribas aims to use Banc- West, which has 252 branches and 1.1 million customers, to sell banking and insurance products in the United States, Prot said. The Federal Reserve gave the French bank status as a financial holding company on April 2, which allows it to sell insurance in the United States for the first time.

In addition to its large operations in California and Hawai'i, BancWest has branches in Oregon, Washington, Idaho, New Mexico and the Pacific islands of Guam and Saipan.

As of March 31, BancWest had assets of $19.4 billion, and was ranked the 36th biggest U.S. bank. It posted a 25 percent increase in first quarter 2001 net income, to $61.7 million.

First Hawaiian Bank and Bank of the West still operate under separate names. First Hawaiian is Hawai'i's oldest bank.

BNP Paribas has a market value of $38.1 billion.