CB Bancshares fights takeover bid with suit
By Andrew Gomes
Advertiser Staff Writer
CB Bancshares launched its first offensive legal attack to fend off a hostile takeover bid by rival Central Pacific Financial Corp., filing a lawsuit yesterday alleging that its competitor illegally acquired voting power of CB shares.
The suit, filed in state Circuit Court, seeks to suspend the voting rights of CB shareholders that own 30 percent or more of CB stock that was pledged to support the takeover.
CB also claims it should have the right to buy back the stock of its shareholders who gave Central Pacific voting power without proper approval, including shares acquired by Central Pacific.
A Central Pacific spokeswoman said bank officials needed to review the suit before commenting.
The legal challenge further mires the takeover attempt that has been marked by disputed shareholder votes and two lawsuits filed against CB since Central Pacific announced its offer in April to buy the state's fourth largest bank in a deal now valued at $270 million.
CB's complaint claims that any agreements between Central Pacific and CB shareholders that gave Central Pacific voting power of more than 10 percent of CB stock violates Hawai'i's Control Share Acquisitions statute governing public companies.
The statute requires approval by a majority of disinterested shareholders before transferring "beneficial ownership" of more than 10 percent in a publicly owned Hawai'i corporation.
Attorneys for CB said in the suit that the bank's largest shareholder, TON Finance BV, a Japanese family company based in the Netherlands with about 9 percent of CB shares, conveyed beneficial ownership by pledging to vote in favor of Central Pacific's takeover proposal and vote against any alternative proposal.
The suit said CB believes there were other equivalent arrangements between its shareholders and Central Pacific, which at the time owned itself a little more than 2 percent of CB stock. The complaint does not identify the shareholders, but said they own as much as 30 percent or more of CB stock.
CB said in the suit that shareholders who agreed to support the takeover as part of the "illegal voting group" should have their voting rights suspended for one year and that CB should have the option to pay $35.84 per share to buy back the stock held by the Central Pacific voting group.
The $35.84 price is the book value of the shares on March 31 minus a 10 percent stock dividend made on June 27.
CB's attempt to wrest ownership from supporters of the takeover follows company moves to win a key shareholder vote rejecting the merger and blocking a Central Pacific attempt to force a revote.
The company also is fighting two lawsuits — one filed by Central Pacific and one filed by a CB shareholder relating to shareholder votes.
Central Pacific has said it will press ahead with its goal to acquire and merge the two banks, but it is not predicting its next moves. These could include increasing the price of its offer, engaging in more litigation, or waiting until next year's annual meeting to try and vote in new CB directors.
Reach Andrew Gomes at agomes@honoluluadvertiser.com or 525-8065.
