CPB Inc. heats up CPB Inc., refusing to play a waiting game any longer, said yesterday it will take its $285 million offer for CB Bancshares Inc. directly to its rival's shareholders.
battle for City Bank
Its $285 million offer for
CB Bancshares will be taken
directly to the stockholdersBy Dave Segal
dsegal@starbulletin.comThe parent of Central Pacific Bank initially imposed a Friday deadline for CB Bancshares, the state's fifth-largest bank, to respond to the March 17 offer. But CPB, the state's fourth-largest bank, decided late yesterday to implement the next phase of its strategy after the parent of City Bank sent a letter to its shareholders saying it was taking the deal seriously but would not "rush to judgment."
The letter, signed by CB Bancshares Chairman Lionel Tokioka and Ronald Migita, president and chief executive officer, didn't indicate whether the company would reply by CPB's deadline.
CB Bancshares, which has had little comment since the deal was publicly divulged a week ago by CPB, also said in the letter it has retained legal counsel and a financial adviser to assist its board of directors in evaluating the proposal.
Clint Arnoldus, CPB's chairman, president and CEO, said he still wants to negotiate with CB Bancshares management, but that the six-week period that has elapsed since the offer was made is unacceptable.
"Since CB has not indicated publicly or privately that it is willing to enter into any discussions with us concerning our proposal, we will proceed to bring it directly to the shareholders," CPB said in a statement. "We remain prepared to commence those discussions at any time and trust that CB, its board, and financial and legal advisers will concur that this is in the best interest of all CB's constituencies."
At CPB's shareholders meeting last night, Arnoldus reiterated his stance and said "we're not going to slow down our process of getting a shareholders vote in this transaction."
Arnoldus and Chief Financial Officer Neal Kanda later left on a red-eye flight to New York and Boston to meet with shareholders and analysts.
CB Bancshares spokesman Wayne Miyao said last night the bank had no comment other than what it said in its letter. CB Bancshares' board will meet this morning and the company's shareholders will have their annual meeting tomorrow.
Arnoldus said that CPB, despite owning 2.3 percent of CB Bancshares' stock, will not have a presence at the meeting.
"They didn't at ours and I respect that," Arnoldus said. "We think they need to have a discussion with their shareholders and discuss with them whatever thoughts they have about this combination."
Arnoldus said he doesn't know whether CB Bancshares will issue another reply Friday but considers the shareholders' letter a response to CPB.
"I'm surprised they haven't sent something to us, but it's nice to see they have financial advisers now and legal advisers," he said. "Hopefully, with that advice, they will come to the table and we will be able to negotiate."
CB Bancshares' letter indicated that the bank wouldn't make decisions based on CPB's timetable.
"We will fully consider the proposal and determine what course of action is in the best interest of our company and constituents," the letter said. "The union of two financial institutions is a matter of great importance, and cannot be considered lightly. City Bank's board and management are fully complying with all legal and regulatory requirements which severely restrict public comment or discussion of this matter until the board has reached its decision."
Last week, CB Bancshares issued a statement asking its shareholders to take no action. A year ago, an earlier CPB bid for CB Bancshares was never even made public.
"When we made our first offer a year ago, it wasn't received very well," Arnoldus said. "And, I think from that, we were trying to (conduct the merger) on a friendly basis, but I think they probably have some feelings about that whole thing."
Arnoldus said CPB withdrew its previous offer after 30 days because it wanted to reevaluate the merger bid and try to strengthen it.
"It took a little bit of time to see what we could pay and came up with this offer," Arnoldus said.
CPB's current offer would give CB Bancshares shareholders 70 percent of CPB stock and 30 percent cash for all outstanding shares. The offer, initially priced at about $70 a share, represented a 54 percent premium based on the April 14 closing price of CB Bancshares' stock. Based on today's close, the value of the deal is now worth $276 million, or $67.76 a share. CPB's stock closed today at $24.67 on the New York Stock Exchange while CB Bancshares' stock ended at $67.15 on the Nasdaq National Market.
Arnoldus has expressed frustration at not being able to talk with CB Bancshares' management. Arnoldus said an April 2 fact-finding meeting by CB Bancshares was the only face-to-face confrontation the two sides have had since the March 17 offer.
CB Bancshares' letter, however, said Arnoldus' complaints have been ill-founded.
"While Mr. Arnoldus complains of inaction on the part of City Bank management, we have in fact been involved in serious fact-finding," the letter said.
Arnoldus said he's still keeping his options open but is unwilling to tip his hand. Among his choices are bypassing CB Bancshares' management and bringing a tender offer to CB Bancshares' shareholders, or calling a special meeting of CB Bancshares' shareholders and trying to supplant members of CB Bancshares' board. CB Bancshares, however, has a poison pill that would make a merger costlier for CPB. Thus, CPB would need to generate enough shareholder support to get CB Bancshares' board to cancel the poison pill.
Central Pacific Bank
City Bank