Posted on: Tuesday, May 13, 2003
City Bank sought '00 merger
By John Duchemin
Advertiser Staff Writer
Central Pacific Bank yesterday continued to exchange blows with City Bank as it fights for public support of its hostile takeover bid of City Bank parent CB Bancshares.
City Bank managers yesterday formally rejected a revised takeover bid by Central Pacific, saying it was still inadequate.
Meanwhile, a memo released to the media by a source close to Central Pacific shows that City Bank in 2000 sought a merger for reasons similar to those used by Central Pacific in its current offer.
City Bank managers in January 2000 proposed a merger with Central Pacific that would have led to branch closings and job cuts in the combined bank — two of the major reasons cited by City Bank last week in rejecting Central Pacific's initial $275 million offer.
In the memo detailing the January 2000 merger proposal, City Bank Chief Executive Ronald K. Migita said the combined bank would enjoy "strategic benefits" including increased revenues, a larger market share, and the ability to cut costs. Cost-cutting would be achieved, Migita said, by closing overlapping branches and eliminating duplicative jobs.
City Bank spokesman Wayne Miyao yesterday said the leaking of the memo was "inappropriate," as is comparing City Bank's 2000 offer to Central Pacific's 2003 offer.
"That was a confidential discussion of a very preliminary idea," Miyao said, referring to the 2000 offer. "There was nothing concrete, no terms, and no formal proposal. We believe it's inappropriate to make a comparison between the two situations, because in 2000 we were talking about three entities entering into an agreement, which is completely different from what they're talking about now."
Central Pacific, in a separately faxed statement confirming the memo's contents, said that it rejected City Bank's earlier proposal because it included Island Holdings Inc., an insurance company controlled by a group of City Bank stockholders.
The disclosure of the memo was the latest maneuver in a public-opinion battle between the banks that has raged since mid-April, when Central Pacific announced its takeover plan.
The directors of both banks have retained lawyers and financial advisers specializing in mergers, have attempted to sway public and shareholder opinion with broadcast and print ads, and have repeatedly blasted each other's positions as harmful to the well-being of shareholders and the community.
Central Pacific last week responded to City Bank's rejection of its initial offer by submitting a new proposal that offered slightly more cash to City Bank stockholders. In its statement yesterday, City Bank said its board unanimously rejected the new proposal.
"The board concluded that the revised ... proposal remains inadequate from a financial point of view and not in the best interest of CB Bancshares," the bank said.
