ticking on bank
The next critical step is a meeting
of CB Bancshares shareholders
Central Pacific Financial Corp., making its next move in what has turned out to be a bankers' chess match, demanded yesterday that acquisition target CB Bancshares Inc. push back the date of a special shareholders meeting.
Clint Arnoldus, chairman, president and chief executive officer of Central Pacific, vowed "to do what it takes over the long haul" if the parent of City Bank does not adhere to CPF's noon deadline tomorrow in moving the meeting to June 19 from May 28.
The response from the parent of Central Pacific Bank comes one day after CB Bancshares' board unanimously rejected a $285 million merger proposal from its rival.
Arnoldus said the date that CB Bancshares set for its shareholders will not give CPF enough time to meet the legal requirement for sending out proxy materials within 20 business days of the May 28 date. The purpose of the meeting, called by CPF under Hawaii law, will allow shareholders to vote on whether Central Pacific can acquire a majority of CB Bancshares' shares.
Richard Lim, president and chief operating officer of City Bank, said CB Bancshares merely followed the guidelines.
"(Arnoldus has) been the one setting the timetable and calling for us to move more quickly," Lim said. "In fact, he set the meeting date in which he agreed in advance to a date after May 27 and before June 22."
Arnoldus said he refused to speculate on what Central Pacific's next steps would be but appeared to rule out sweetening the offer, at least initially.
"I'm not prepared to negotiate against ourselves," he said. "We've got to be able to sit around the table. I think we've got a very attractive offer."
Investors appeared to send a message today that the rejection by CB Bancshares was hardly the final word. The company's stock edged up 20 cents to $67.98. Central Pacific's shares rose 68 cents to $26.43.
Not all investors, though, were happy about the direction the merger is taking.
Ton Finance, CB Bancshares' largest shareholder with a 8.9 percent stake, said yesterday it did not back a hostile takeover even though it earlier committed its shares to vote for the deal.
"The voting agreement should not be viewed as our support of any merger plan which is not in the long-term best interest of CB Bancshares' shareholders and which would not result in a stronger bank to serve the Hawaii market," Ton said.
San Francisco-based attorney Gilbert Serota, whose firm is representing Ton, said the private family-owned investment company views its investment in CB Bancshares as passive and does not want to influence the CB Bancshares board, management or other shareholders in exercising their judgment.
"Ton entered into a voting agreement, and it's not going to renege on the agreement," Serota said. "Ton merely wanted to clarify the fact that when it entered into the voting agreement, it was not in the spirit of supporting a hostile takeover of City Bank."
Lim, who said the bank has received "hundreds of calls" against the merger, said in a press conference yesterday that Arnoldus' media blitz has been counterproductive.
"His media campaign was designed to intimidate our board into making a hasty decision, but in fact it ended up terrorizing our employees and upsetting our customers," Lim said. "I'll never forget going to the branches and talking to the employees. ... I could see the fear in their eyes even though they didn't say much."
Lim said that Arnoldus has alienated so many people that if the banks were to merge, a lot of business and shareholder value would be lost.
Arnoldus defended the CPF's decision to go public with the offer. "The only reason we went public was because the shareholders were not being informed of this great transaction," he said. "We tried for over a year to negotiate a friendly way to do this. We made it public because we had no other place to go."
Ironically, CB Bancshares and Island Insurance collectively attempted to buy Central Pacific in December 1999. That deal fell through.
Central Pacific Bank