Deadline looms for
Central Pacific’s offerCity Bank's parent has until
tomorrow to decide on CPF's
$395 million hostile takeover proposal
Will they or won't they?
CB Bancshares Inc.'s management and board of directors continued their silence yesterday as the deadline ticked down on rival Central Pacific Financial Corp.'s sweetened take-it-or-leave-it hostile takeover offer.
City Bank's parent, which has spent about $7 million thwarting Central Pacific's advances for the past year, has until tomorrow to begin negotiations or Central Pacific will withdraw its offer, Central Pacific has said.
CB Bancshares' executives and board members face four choices:
>> Accept the deal, which was worth $395 million, or nearly $89 per CB Bancshares share at yesterday's market close;
>> Reject it;
>> Let the deadline lapse without any announcement; or
>> Begin negotiations with Central Pacific over transitional issues and possibly try to squeeze out a better deal.CB Bancshares spokesman Wayne Miyao said he couldn't comment on anything regarding the decision. He wouldn't say whether the bank tipped its hand by filing a notice Monday that it would appeal a state agency ruling that gave Central Pacific a go-ahead for the merger. The notice needed to be filed to meet a 30-day deadline.
"We're just doing our best to defend our bank for the interest of our customers, shareholders and our company," Miyao said.
The president of a Seattle brokerage firm said he's frustrated that CB Bancshares has been unreceptive to Central Pacific's offers.
"The CB Bancshares board has a fiduciary responsibility to do what's right and to tell the shareholders when there's an offer as significant as this offer," said Martin Nelson Jr., whose firm Martin Nelson & Co. and clients own about 4 percent of CB Bancshares' stock and 1 percent of Central Pacific shares.
"I believe (CB Bancshares' officers) are afraid of losing their jobs and (board members are afraid of) losing their positions on the board. It has nothing to do with what is right for the shareholders, and that's where my frustration lies."
CB Bancshares appears to be using all its allotted time to study the offer, which is the third that Central Pacific has made since its initial offer announced on April 16, 2003. Just before that first proposal, CB Bancshares' stock was trading at a split-adjusted $42.16 a share.
The new offer, which is more than double that price, is for $22.27 in cash and 2.4 shares of CPF shares for each share of CB Bancshares stock.
So far, investors have been betting that CB Bancshares will reject the deal because the stock is more than 22 percent below the value of the latest offer price. Meanwhile, City Bank's parent reported record first-quarter earnings Monday that were 147 percent higher than the year earlier.