CPB claims 25 percent of City Bank

By John Duchemin
Advertiser Staff Writer

Central Pacific Bank says it has locked up at least 25 percent of the shares of City Bank, which Central Pacific is trying to buy in a hostile takeover bid.

Central Pacific chairman Clint Arnoldus and chief financial officer Neil Kanda yesterday said they are "very comfortable" that at least one-quarter of the stock of City Bank parent CB Bancshares supports the $285 million takeover offer, which City Bank management has not approved. The Central Pacific executives said shareholder support for the deal is "broad and deep" beyond that 25 percent, but would not provide a more specific estimate.

The comments came as Arnoldus and Kanda returned from a U.S. Mainland trip to visit institutional investors in both banks. Central Pacific, Hawai'i's fourth-largest banking company, on Monday formally requested a special CB Bancshares shareholders' meeting to seek a vote approving the merger.

"We received very, very strong support from institutional investors," Arnoldus said yesterday. "It appears there is significant desire to do this deal."

Central Pacific announced the takeover attempt on April 16, and since then has waged a public-relations campaign to win CB Bancshares shareholders over to its position.

CB Bancshares managers and directors have said they are seriously considering the deal — but have attempted to discourage shareholders from jumping the gun and approving the merger before management gives its approval.

Two CB Bancshares institutional stockholders, controlling more than 10 percent of the total shares, have already agreed to back Central Pacific's offer, which would pay about $70 per share in cash and Central Pacific stock. That represents a premium of about $25 per share for CB Bancshares shareholders, whose stock was trading at about $45 per share before the takeover bid was announced.

In other CB Bancshares news, a shareholder has sued the bank and its directors, alleging they have violated their duty to shareholders by balking at a hostile takeover bid by local rival Central Pacific Bank.

Plaintiff Barbara Clarridge, in a state Circuit Court lawsuit filed yesterday, claims CB Bancshares directors are illegally blocking the hostile bid, which would pay the bank's shareholders cash and Central Pacific stock worth $70 per CB Bancshares share. The deal would return about 50 percent over the CB Bancshares stock price on April 16.

Directors are "unlawfully entrenching themselves in office and preventing the company's shareholders from maximizing the value of their holdings," Clarridge's lawsuit alleges.

CB Bancshares spokesman Wayne Miyao said the bank thinks the lawsuit "is very inappropriate at this time."

"Our board is still researching and considering the Central Pacific proposal, and will make the best decision for CB Bancshares in due time," Miyao said.

Also yesterday, CB Bancshares announced a 10 percent stock dividend in addition to a cash dividend of 12 cents per common stock for the second quarter of 2003. The dividends will be payable on June 27 for stockholders of record on June 16. The cash dividend is a 9.1 percent increase over the 11 cents per share declared for the first quarter of 2003.

CB Bancshares is Hawai'i's fifth-largest bank company.