City Bank parent reinforces poison pill

By Andrew Gomes
Advertiser Staff Writer

CB Bancshares Inc. strengthened its anti-takeover provisions today, granting shareholders the right to dilute the stock of anyone who acquires 15 percent or more of the company.

CB Bancshares, which owns City Bank and is trying to fend off an unsolicited acquisition offer by local rival Central Pacific Financial Corp., had a so-called "poison pill" that was triggered by an acquisition of 20 percent or more of stock. With the amendment announced today, that threshold will now be 15 percent.

If one shareholder acquires 15 percent or more of the company, all shareholders would be given a discount on buying additional shares. That would cause more shares to flood the market, diluting the value of existing shares and making it harder for any one shareholder to gain control of the company.

The new provision, when triggered, allows shareholders to buy $450 worth of stock for $250, and to do that once for every share they own. Another option for shareholders is to pay nothing and receive $250 in stock for every share they own.

CB Bancshares said it lowered the poison-pill threshold to be in line with the standard of 10 percent or 15 percent for most public companies.

Central Pacific owns 88,741 shares of CB Bancshares stock, or about 2 percent. CB Bancshares' largest shareholder, TON Finance BV, owns about 9 percent. Central Pacific has said that TON Finance supports the takeover bid.

Earlier this year, CB Bancshares warned that the poison pill would be triggered if Central Pacific tried to call a second meeting for shareholders to consider the acquisition offer made in April, after shareholders declined to consider the offer at a special meeting in May.

CB Bancshares also amended its corporate bylaws so that the board would be notified of a nomination to that body by a shareholder 90 to 120 days before an annual meeting.