City Bank shareholders to vote on takeover bid today
By John Duchemin
Advertiser Staff Writer
A key vote takes place this morning that could decide the fate of Central Pacific Bank's bid to take over City Bank.
CB Bancshares, parent of City Bank, has called today's vote so its shareholders can decide whether they want to be bought out by Central Pacific Bank. But Central Pacific is asking its supporters not to participate in the vote, which it says is illegitimate. A look at the banks' positions on the vote: CENTRAL PACIFIC • Says the May 28 vote came about too quickly for shareholders to make an intelligent decision on the takeover offer. CB Bancshares contractors mailed out the ballot less than two weeks ago. • Says the vote isn't valid anyway, because it revised its initial offer to change the proportion of cash and stock. Calls for a late June meeting on its "new offer." • Urges shareholders to boycott today's meeting, not only to show support for its position but to prevent CB Bancshares from reaching a quorum.
CB Bancshares (City Bank) • Says it has every right to hold a vote on May 28, because that's within the legal time frame set by Central Pacific when it demanded the vote on April 28. • Rejects Central Pacific's contention that its revised offer warrants a new voting date, because it is substantially similar to the original offer. Claims the new offer is just a ruse to buy more time. • Rejects the assertion that a failure to reach quorum today means a new vote is necessary.
Shareholders of City Bank's parent, CB Bancshares, meet at 8 a.m. to decide whether to let Central Pacific proceed with its $275 million takeover bid. While the vote is only one step in a long, complex process, both banks are treating it as a referendum on the deal.
What's at stake
The vote is the first opportunity for CB Bancshares shareholders to choose between the rival banks' positions. Central Pacific, a $2 billion bank and the state's fourth-largest, claims the combined bank would be more profitable and better able to compete with other top Hawai'i banks. Central Pacific's merger could result in the elimination of about 20 percent of the jobs and branches from the combined bank.
CB Bancshares rejects the takeover bid, saying not only that Central Pacific's proposed price is too low, but also that it would harm the community by eliminating yet another locally-controlled institution.
As the banks have battled for shareholder sympathy, today's vote has become controversial.
Central Pacific claims the meeting, which was called by CB Bancshares at the earliest legal date, gives too little time for CB Bancshares shareholders to consider the $70-per-share offer.
The would-be buyer, Hawai'i's fourth-largest bank, claims it has voting control of at least 30 percent of CB Bancshares — not enough to take over the target bank outright. Central Pacific has called for CB Bancshares shareholders to boycott today's meeting.
"It's urgent that you do nothing — and do it now," Central Pacific entreated in a full-page newspaper advertisement yesterday. Central Pacific executives did not return calls requesting comment yesterday.
CB Bancshares hopes the meeting attracts enough "no" votes to provide a convincing defeat to Central Pacific. CB Bancshares spokesman Wayne Miyao said yesterday he couldn't predict which way the vote will go.
The vote could reveal the sentiments of the individuals, families, trusts and speculators who together own slightly less than half of the bank's stock. These shareholders likely represent the swing vote, since CB Bancshares directors and employees own about 12 percent of their company, and institutional investors — many of whom favor Central Pacific — own about 40 percent.
If enough small-scale shareholders boycott the vote, as Central Pacific wants, it could spell trouble for CB Bancshares — especially if less than 25 percent of shareholders cast votes. Central Pacific needs a 75-percent majority, under Hawai'i law, to complete the merger.
Reach John Duchemin at jduchemin@honoluluadvertiser.com or 525-8062.
