What began as a bitter takeover battle spearheaded by Central Pacific Financial chief Clint Arnoldus, right, and fought by CB Bancshares head Ron Migita, left, will likely end tomorrow with the amicable merger of the two companies.

Bank merger comes down
to final vote tomorrow

It was a bank merger that was unthinkable 18 months ago.

But with the ill will from a once-hostile takeover now swept under the rug, Central Pacific Financial Corp. and CB Bancshares Inc. appear set to walk down the aisle after voting results are announced tomorrow at each institution's respective shareholders meeting at Dole Cannery.

Technically, the banks' holding companies won't become one until Wednesday, when the merger officially closes. But the day of reckoning is tomorrow when the banks release whether they each received the necessary approval from 75 percent of the outstanding shares. The betting on Wall Street is that it's a done deal.

Both companies' stocks have been steadily climbing in recent weeks and the shares of City Bank's parent closed Friday at an all-time high of $95.75. Central Pacific's stock, which represents three-quarters of the takeover deal, closed Friday at a five-month high of $28.50.

The actual price that CB Bancshares' shareholders will receive from the cash-and-stock offer won't be determined until the stock market closes on Tuesday. That's because the stock portion of the deal is based on the average closing price of Central Pacific's stock over a 10-day trading period that ends the day before the merger is effective. The good news, though, is that it appears shareholders will receive the equivalent of roughly $95 a share, which is above the $91.83 the merger was valued at when it was announced in April and more than double the price CB Bancshares' stock was trading at before Central Pacific came courting in March 2003.

Clint Arnoldus, chairman, chief executive and president of Central Pacific, can't wait to get to the next step.

Banking on a merger

CB Bancshares shareholders meeting

Tomorrow, 9 a.m., Dole Cannery, Second Floor, Lanai Ballroom, 735 Iwilei Road, Honolulu

>> Items: To approve merger with Central Pacific Financial.

Central Pacific Financial shareholders meeting

Tomorrow, 11 a.m., Dole Cannery, Mililani Ballroom, 735Iwilei Road, Honolulu

>> Items: To approve the merger with CB Bancshares; to approve an amendment to increase the number of shares of Central Pacific common stock; to approve Central Pacific's 2004 stock compensation plan; to approve Central Pacific's 2004 annual executive incentive plan.

"I think once we're beyond the shareholder vote, we can deal with the issues of integrating the banks," said Arnoldus, who will be the CEO of the combined bank that will keep the Central Pacific name. "Then, the market can really get focused on the tremendous benefits and hopefully focus on higher (price-earnings) multiples and a higher stock price."

Central Pacific Bank's parent has said all along that the merger with City Bank's parent is good for the state, communities, customers and shareholders. Certainly, it gives Central Pacific a more diversified product line with more branches and automated teller machines.

But for CB Bancshares, tomorrow figures to be a more melancholy moment as Chairman Lionel Tokioka conducts what promises to be the bank's final shareholders meeting. It will mark the end of a 45-year history for a bank that was started by second-generation Japanese Americans.

On Thursday, CB Bancshares' stock will cease to exist as the merged bank begins trading under Central Pacific's CPF ticker symbol.

"It's been fun and exciting. It's been an interesting ride," said Tokioka, who has spent a combined 40 years with CB Bancshares and the institution it acquired in 1994, International Savings & Loan.

While the merger appears a foregone conclusion, it's the announcement of which branches will be closed that probably is of most concern to employees and customers.

They may have to wait a little while longer to get their answer since the banks of the two holding companies actually won't merge until the first quarter so that they can be properly integrated. It's also uncertain whether announcements of the branch closures will be trickled out or be announced all at once.

Central Pacific has said it would close approximately 10 branches that are in close proximity to other branches. In return, Central Pacific has said it ultimately would open a new branch for every branch it closes.

Still, the closure of branches means displacement and reassignment for employees while customers may have to travel a few extra blocks -- or deal with new personnel -- for their transactions.

The branch closures also mean that employees, who were told there would be no involuntary layoffs, may have to make a choice. Either accept reassignment, possibly to a lower-ranking position, or leave the bank. Arnoldus also has brought up the possibility in the past of voluntary separation packages to reduce the number of employees.

Central Pacific Bank



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