City Bank reviewing offer
By John Duchemin
Advertiser Staff Writer
In what could be a key move forward in Central Pacific Bank's hostile takeover bid for rival City Bank, executives at City Bank yesterday said they had hired financial and legal advisers to review the bid.
Advertiser library photo
Key questions remain unanswered, however, about City Bank's position on the $285 million buyout offer, even as the bank prepares for what could be its last annual shareholders' meeting tomorrow.
"The fact they have hired financial and legal advisers is very good news," Central Pacific chairman Clint Arnoldus said.
Not only have City Bank executives not approved the bid, it remains unclear how many key stockholders support the offer announced last week by Central Pacific officials.
Still, Central Pacific chairman Clint Arnoldus said City Bank's move to retain advisers was a good sign. After fruitless attempts since late March to get City Bank directors to the bargaining table, Central Pacific has threatened to bypass the board and force a shareholder vote if City Bank managers won't negotiate.
The takeover offer is worth $70 per share of stock in City Bank parent CB Bancshares, a return of more than 50 percent, based on CB Bancshares stock price last week. Several of City Bank's largest institutional investors, who control about 12 percent of the company's stock, have announced their support for the takeover.
"The fact they have hired financial and legal advisers is very good news, and I hope it means we can sit down and have meaningful negotiations with them," Arnoldus said.
Central Pacific says the combined bank, which would be the fourth-largest banking company in Hawai'i, controlling about 14 percent of residents' deposits, would not only be more able to compete with the three largest banking companies, but also be more profitable.
Despite millions of dollars in expected merger costs, the bank estimates a merged Central Pacific's earnings in 2004 and 2005 to be at least 10 percent higher than if the institutions remain separate.
At Central Pacific's annual meeting last night, stockholders largely approved of the takeover.
"It's a terrific idea," said Honolulu cardiologist Stewart Matsumoto. "The banks should join together and make themselves stronger. Why fight like the Hatfields and McCoys? If you get together, you'll be better off."
Matsumoto said the banks' different strengths would be complementary. Central Pacific carries a larger commercial loan portfolio than City Bank, while City Bank specializes in residential mortgages.
Shareholders said they approved of Arnoldus' assertion that the banks are a natural fit. Henry B. Clark Jr., a retired Castle & Cooke chairman and shareholder of both banks, offered to "drop by" City Bank to help convince managers of the deal's merit.
"Many years ago, I was the second- or third-largest shareholder there, and I thought it was a good idea to merge back then," Clark said.
But Clark cautioned Central Pacific to remain friendly in its tactics. A contentious merger could sow ill will within the combined company, he said.
City Bank officials yesterday said they would take a good look at Central Pacific Bank's takeover bid.
"We ... are giving the proposal the full and serious consideration it deserves ... but we will not rush to judgment," said chairman Lionel Y. Tokioka and City Bank chief executive Ronald K. Migita in a letter to shareholders yesterday.
