Central Pacific drops suit
against City Bank parent
Less than two weeks after questioning the validity of more than 159,000 shareholder votes, Central Pacific Bank's parent has decided to withdraw its lawsuit against rival CB Bancshares Inc.
The move by Central Pacific Financial Corp. comes a little more than a week after it scrapped plans for a June 26 special shareholders meeting, which it had called in an attempt to pursue its hostile takeover for City Bank's parent.
Ian Campbell, CPF's Los Angeles-based spokesman, said yesterday the bank still intends to complete the merger, but has decided to focus on pursuing the regulatory approvals it needs.
"We said before that the May 28 meeting was a secondary issue and that we were pursuing a new direction in order to complete the merger," he said. "We are strongly committed to pursue the merger. We intend to see it completed. There should be no question in any objective observer's mind that the majority of shareholders are in support of the merger."
However, City Bank hailed the dismissal of the complaint as another victory in its bid to remain independent.
"This is another clear admission of defeat by CPF," said CB attorney Lex Smith, a partner in the law firm Kobayashi, Sugita and Goda. "CPF has withdrawn all of its legal challenges to the May 28 meeting, effectively admitting that the vote at that meeting was valid and binding as we have been saying all along."
The withdrawn complaint, whose stipulation was approved by state Circuit Judge Victoria Marks, came after her June 17 ruling in which she said she would continue CB's motion for summary judgment of the CPF suit until Aug. 18. She granted the continuance to allow CPF more time to conduct discovery regarding the disputed proxy votes.
Campbell said CPF is plotting its next course of action.
"We don't intend to comment on our strategy," Campbell said. "When we make our next step, it will be quite visible. But we don't plan to comment on our next step at this stage. It's premature."
Among the options CPF could pursue are sweetening its offer for a second time, or going back to court to challenge CB's poison pill, which is a shareholder-rights plan that would dilute the number of shares that CPF can use to support the merger. The poison pill thus would make it more expensive for CB to be acquired.
CPF's current offer is worth $290 million, higher than the $285 million it was worth when it initially was announced on April 16. At Friday's closing price, each CB shareholder would get a combination of cash and CPF stock valued at $67.28 a share, which is a price adjusted for CB's 11-for-10 stock split on June 27. The offer is broken down as 65 percent of CPF stock and 35 percent cash.
Local CPF spokesman Wayne Kirihara declined to say whether CPF would make another offer, but said continuing its challenge of the May 28 shareholder meeting results was a "nonissue."
"What happened in the results of the May 28 meeting, and whether there was a quorum or not, really doesn't change our strategy going forward," Kirihara said.
The May 28 special meeting of CB shareholders had been important to CPF because it was seeking approval to acquire a majority of CB stock as part of its merger attempt.
"CPF now cannot obtain shareholder approval for the control share acquisition it proposed to make through its proposed exchange offer," Smith said. "CPF has failed in the courts and with the shareholders. It's time for CPF to listen to what CB Bancshares has been saying all along -- its hostile takeover attempt is bad for shareholders, customers, employees and the communities City Bank serves."