Takeover a win-lose offer
| • | Graphic: Golden parachutes for City Bank executives |
By Andrew Gomes
Advertiser Staff Writer
As Central Pacific Bank wages its campaign to acquire rival Hawai'i financial institution City Bank, many City Bank employees, executives and directors stand to both win and lose if the hostile takeover is successful.
At stake are the loss of an undetermined number of City Bank jobs that could include everyone from bank tellers to company president — yet there could be sizable cash and stock benefits to some of those same employees.
MIGITA
LIM
The situation has presented some City Bank officers and directors with a conflicting decision as they consider the takeover bid that could be hard to complete without their support.
Central Pacific, through parent Central Pacific Financial Corp., has offered to buy all stock of City Bank parent CB Bancshares Inc. for $70, a $23.62 per-share premium over City Bank's stock price when the offer was made two weeks ago.
Central Pacific has offered to pay City Bank shareholders most of that premium, or $21 per share in cash, plus the equivalent of $2.62 in Central Pacific stock. The balance of the $70 offer would be made in Central Pacific shares.
The offer is substantial for many of City Bank's 500 employees. The company's president and chief executive officer, Ronald Migita, would receive $495,075 in cash from the deal. He also would retain about $1.2 million in stock, plus options to buy $2 million worth at a discount, though not all the options are exercisable immediately.
As part of a severance package, Migita would receive $1.5 million plus healthcare benefits and other payments.
Other top company officers would receive combined stock benefits and severance between $1 million and $3 million.
Outside directors of the company — including House Speaker Calvin Say, Ala Moana Center General Manager Dwight Yoshimura and Island Insurance Co. Ltd. chief executive Colbert Matsumoto — would have $231,770 in exercisable stock options.
City Bank employees who take part in the employee stock ownership program stand to receive $5.6 million in cash and $13 million in stock from a Central Pacific acquisition.
But there would be elimination of some City Bank positions, including executives, directors and employees, under the Central Pacific proposal.
Neither bank is estimating how many jobs would be cut, though Central Pacific has estimated that as many as 10 bank branches might be closed. City Bank, which has a 10-member board, was offered three seats on the combined board of directors.
So far, City Bank has said it is considering the offer carefully as Central Pacific builds support among large institutional shareholders.
As of yesterday, Central Pacific said it had voting commitments from shareholders holding 25 percent of City Bank stock. City Bank executives and participants in the employee stock ownership program hold 12.5 percent of company stock.
More than 75 percent of shareholders must vote in favor of a merger, which also must be approved by City Bank's board.
City Bank directors conceivably could try to block the takeover, though analysts who follow public companies say that if enough shareholders favor the acquisition, they can always vote to replace directors with representatives who favor the deal.
That would take time, and could, in combination with other blocking efforts, make the deal too expensive for Central Pacific, which expects acquisition costs of $32 million.
City Bank has until Saturday to schedule a special shareholders meeting to decide whether to sell its stock to Central Pacific. The meeting must be held by June 22.
Reach Andrew Gomes at agomes@honoluluadvertiser.com or 525-8065.
