Major bank shareholder
demands merger action

The largest domestic institutional shareholder of both CB Bancshares Inc. and Central Pacific Financial Corp. is again demanding that the two banks sit down at the bargaining table and work out their merger differences.

Bruce Sherman, chief executive officer of Naples, Fla.-based Private Capital Management Inc., said a combined bank would stop the bleeding of legal fees and investment banker fees that are ending up in New York City coffers. The two Honolulu-based banks have been locked in a hostile takeover battle for 10 months since Central Pacific Bank's parent publicly declared its intent to buy its rival.

"I think it's horrific that together they've spent more than $15 million in legal fees and investment banking fees as opposed to sitting down as one gentleman to another and negotiating a transaction," said Sherman, who controls a combined $67.9 million worth of shares between the two banks.

Sherman's recent Securities and Exchange Commission filings show that he controlled 9.8 percent of City Bank's parent, and 9.3 percent of Central Pacific as of Dec. 31. That works out to $26.9 million and $41 million, respectively, according to data provided by

"I think there's a lot to lose here in terms of institutions wanting to invest in Hawaii," Sherman said.

He was pleased with recent government regulatory decisions that were in favor of Central Pacific's takeover proposal.

"The value of a combined institution to the shareholders will, in my opinion, be substantially above the values of each institution running as a separate institution when added together," he said.

CB Bancshares spokesman Wayne Miyao reiterated the company's previous claim that Central Pacific is trying to acquire CB at a bargain price.

"We've been saying all along that CB Bancshares' board and shareholders rejected (Central Pacific's) proposal as completely inadequate," Miyao said, adding that it wasn't in the best interests of the company's shareholders, customers, employees and statewide community.

"Central Pacific's offer never reflected CB Bancshares' true value, a fact that we believe has become increasingly obvious after our three consecutive quarters of record earnings. If the average earnings multiple paid in other bank mergers were applied to CB Bancshares' current performance as of Dec. 31, Central Pacific's proposal should be more than $126 per share to be comparable. That's more than 90 percent higher than the current CPF offer."

CPB spokeswoman Ann Takiguchi said Sherman's comments reflect what the bank has been saying all along.

In an earnings release last month, CPB Chief Executive Clint Arnoldus said, "We continue to look forward to an opportunity to discuss the merger with CB Bancshares' management and board."


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