City Bank chief lashes out
By John Duchemin
Advertiser Staff Writer
In his first public statements on Central Pacific Bank's hostile takeover bid for local rival City Bank, the leader of City Bank blasted Central Pacific officials for what he called improper business behavior.
"I can assure you, this is not how we do business in Hawai'i," said City Bank president and chief executive Ronald K. Migita, referring to Central Pacific's threat to take its $285 million buyout offer to City Bank stockholders if Migita and fellow officials did not agree to negotiate.
In a press conference yesterday, Migita acknowledged that City Bank had retained Wall Street firm Sandler O'Neill & Partners as financial adviser, hired a legal adviser, and was seriously considering the takeover bid.
Responding to Migita's comment, Central Pacific chairman Clint Arnol-dus said he had no choice after a round of fruitless attempts to talk with City Bank officials.
"After a month of trying to establish friendly discussions, we concluded that the only way to ensure that shareholders, customers, employees and Hawai'i were informed about our formal offer was to take it public," said Arnoldus, who was en route to discuss the deal with U.S. Mainland investors.
Migita's remarks came a day before the annual shareholders meeting of City Bank's parent company, CB Bancshares, which starts at 9 a.m. today in the bank's downtown headquarters.
The meeting could provide a gauge of shareholders' sentiments toward the takeover bid. Several shareholders, including two of CB Bancshares' largest institutional investors, have announced their support for the deal, which would pay $70 per share of their stock.
Central Pacific is the state's fourth-largest banking company; City Bank is No. 5. Central Pacific officials announced the takeover bid April 16, saying the combined entity, with nearly $4 billion in assets, would be more competitive with the state's three largest bank companies.
Until yesterday, City Bank executives had refrained from public comment, other than a few letters indicating they were reviewing the deal. Migita said the bank was being cautious about meeting regulatory guidelines about corporate disclosure and preventing a "rush to judgment."
"A union of two banks of our size is serious, and we need to weigh factors including whether it is a fair price and the impact on employees, shareholders and the community," Migita said.
Central Pacific and City Bank, both founded by Japanese Americans in the 1950s, have long been the subject of merger talks because they serve a similar market.
In comments last week, Central Pacific's Arnoldus said the banks had discussed merging several years ago, but the deal faltered after City Bank tried to include Island Insurance. Arnoldus also said Central Pacific had approached City Bank last year with a less lucrative offer, and was rejected.
At yesterday's press conference, Migita said past merger talk has been "speculation," and characterized the current Central Pacific bid as a "proposal" rather than a formal offer.
Arnoldus said Central Pacific had "definitely made a formal offer."
Central Pacific has asked management to respond by tomorrow, but Migita said his bank probably would take longer to consider the buyout bid.
"We are moving forward with all deliberate speed," he said.
