Central Pacific seeks vote on bid

By John Duchemin
Advertiser Staff Writer

Central Pacific Bank, which wants to buy rival City Bank, yesterday formally requested a City Bank shareholder vote on the hostile takeover bid.

Central Pacific also filed a "tender offer" for all shares of City Bank parent CB Bancshares.

Both steps were official formalities taken to advance the buyout offer and to put pressure on City Bank management, which has not approved the $285 million offer.

"We continue to be fully prepared to immediately commence meaningful, friendly discussions with CB (City Bank)," Central Pacific chairman Clint Arnoldus said yesterday in a press release. "Unfortunately, CB has been unwilling to discuss this offer with us in a meaningful way. The shareholders of our two companies cannot be asked to wait indefinitely."

City Bank's chief executive, however, said he was "disappointed" with Central Pacific's moves. City Bank management has said it is seriously considering the offer and asks for shareholder patience.

"We believe CPB's (Central Pacific's) actions are obviously designed to put pressure on the CB Bancshares board while we are continuing to consider CPB's proposal," said Ronald K. Migita, president and chief executive of CB Bancshares. "The CB Bancshares board takes its fiduciary responsibilities very seriously and will make its decision in due course."

The tender offer, filed this morning with the Securities and Exchange Commission, amounts to a formal announcement of Central Pacific's buyout offer, which calls for about $70 per share in cash and stock to go to Central Pacific shareholders.

Several City Bank shareholders, including two of the company's largest institutional investors, have announced support for the deal, which would approximately double Central Pacific's size but lead to job losses and some branch closures.

Central Pacific requested that the meeting be held by June 22.

Central Pacific's Arnoldus has said City Bank shareholders seem to approve of the deal, though City Bank's Migita disagrees, saying his company's shareholders agree with a "cautious" approach to the takeover attempt.

To buy City Bank, Central Pacific needs to gain approval of more than 75 percent of City Bank shareholders, and neutralize several City Bank defensive measures that protect the bank from a hostile takeover. The most onerous of these is a "poison pill" that floods the stock market with extra City Bank shares if a would-be buyer acquires more than 20 percent of shares.

To close the deal without City Bank management's approval, Central Pacific will have to find a way to force City Bank to eliminate the poison pill. The would-be buyer has not said how it would do this, but Central Pacific officials say a strategy is in place.

Reach John Duchemin at 525-8062 or jduchemin@honoluluadvertiser.com.