SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
______________________________
SCHEDULE 14D-9
SOLICITATION/ RECOMMENDATION STATEMENT UNDER
SECTION 14(D)(4) OF THE SECURITIES EXCHANGE ACT OF 1934
______________________________
CB BANCSHARES, INC.
(Name of Subject Company)
CB BANCSHARES, INC.
(Name of Person(s) Filing Statement)
COMMON STOCK, PAR VALUE $1.00 PER SHARE
(Title of Class of Securities)
124785106
(CUSIP Number of Class of Securities)
______________________________
Dean K. Hirata
CB Bancshares, Inc.
201 Merchant Street
Honolulu, Hawaii 96813
(808) 535-2500
(Name, Address and Telephone Number of Person Authorized to Receive Notice and
Communications on Behalf of the Person(s) Filing Statement)
______________________________
With copies to:
Fred B. White, III
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, New York 10036
(212) 735-3000
|X| Check the box if the filing relates solely to preliminary communications
made before the commencement of a tender offer.
PRESS RELEASE ISSUED BY CB BANCSHARES, INC.: CB BANCSHARES BOARD OF
DIRECTORS REJECTS CPF'S UNSOLICITED PROPOSAL
LETTER TO CB BANCSHARES, INC. EMPLOYEES
SECTIONS FROM CB BANCSHARES' PRELIMINARY PROXY STATEMENT FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION ON MAY 5, 2003
PRESS RELEASE ISSUED BY CB BANCSHARES, INC.: CB BANCSHARES BOARD OF DIRECTORS
REJECTS CPF'S UNSOLICITED PROPOSAL
MAY 4, 2003
FOR IMMEDIATE RELEASE
Contact: Wayne T. Miyao
Senior Vice President, City Bank
Corporate Communications
Ph: (808) 535-2590
Email: wmiyao@cb-hi.net
Website: www.citybankhawaii.com
CB BANCSHARES BOARD OF DIRECTORS
REJECTS CPF'S UNSOLICITED PROPOSAL
RECOMMENDS THAT SHAREHOLDERS VOTE AGAINST CONTROL SHARE ACQUISITION PROPOSAL
SETS SPECIAL MEETING OF SHAREHOLDERS FOR MAY 28, 2003
HONOLULU, May 4, 2003 - CB Bancshares, Inc. (Nasdaq: CBBI), which is the
holding company of CityBank, announced today that its Board of Directors has
unanimously rejected Central Pacific Financial Corp.'s (NYSE: CPF) ("CPF")
unsolicited proposal to acquire all of CB Bancshares outstanding shares for a
combination of $19.09 in cash and 1.7233 shares of CPF common stock per share
of CB Bancshares. After careful consideration, including consultation with
independent financial and legal advisors, the CB Bancshares Board concluded
that the proposal is inadequate from a financial point of view and not in the
best interests of its shareholders, employees, customers, suppliers and local
communities. Furthermore, the CB Bancshares Board unanimously recommends that
shareholders vote against the control share acquisition proposal at the
Special Meeting of Shareholders scheduled for May 28, 2003.
Mr. Lionel Y. Tokioka, CB Bancshares Chairman of the Board said, "CB
Bancshares is a strong local institution with a proud tradition of delivering
superior financial products and services to tens of thousands of individuals
and small and medium sized businesses across the islands. The unsolicited
proposal from CPF undervalues our franchise, our market position and the
loyalty of our customers, and raises serious concerns about the adverse effect
such a combination would have on the people, communities and economy of
Hawaii."
The Board concluded that:
o THE PROPOSAL IS INADEQUATE FROM A FINANCIAL POINT OF VIEW. CPF's
proposal does not reflect the true earnings power of the CB Bancshares
franchise. The Board noted that CB Bancshares is enjoying:
- Positive momentum with compound annual earnings per share growth
greater than 15% over the last five years;
- Strong growth in core deposits and fee income; and
- Improved asset quality.
With strong loan loss reserves and significant funding and capital
capacity, CB Bancshares is well positioned for future growth.
The Board also considered that since 70% of the consideration that CPF
is proposing is in the form of CPF common stock, shareholders of CB
Bancshares would be subject to market risk should the value of CPF's
shares decline. In this regard the Board noted that:
- CPF's stock is trading near an all-time high;
- CPF's recent earnings per share growth is attributable, in part, to
stock repurchases; and
- Based on the hostile nature of the proposal and the lack of
experience of CPF's management, there is substantial execution risk.
If CPF were to fail to realize the benefits it expects, CPF's stock
price would be vulnerable to downward pressure.
o CPF'S COST SAVINGS CANNOT BE ATTAINED WITHOUT SIGNIFICANT EMPLOYEE
LAYOFFS. CB Bancshares' employees are its most valuable asset. Their
spirit and dedication are vital to the bank's continued success. CPF has
stated:
- Approximately 10 bank branches would be eliminated and CB Bancshares'
loan production offices in California would be closed; and
- CPF estimates $16 million in annual merger cost savings. The Board
believes such savings would likely be achieved largely from the
layoffs of more than 200 employees.
The Board considered that the loss of jobs would create significant
hardships for the affected employees and their families, and their
communities. The economic impact of these job losses could reverberate
to eliminate almost 500 additional jobs with an estimated negative
impact of $16.5 million to the Hawaii economy.
o THE PROPOSED TRANSACTION RAISES SIGNIFICANT ANTICOMPETITIVE CONCERNS.
The proposed acquisition raises significant antitrust and
anticompetitive concerns detrimental to Hawaii-based consumers and small
businesses.
o THERE COULD BE A SUBSTANTIAL REDUCTION IN BANKING SERVICES FOR RETAIL
AND BUSINESS CUSTOMERS. CB Bancshares customers have come to expect a
personal level of service. The Board believes that CB Bancshares small
business and retail customers would not be valued CPF customers and
would be underserved by CPF's big bank strategy. In addition, services
currently offered to CB Bancshares customers such as free checking with
no minimum balance and nonconforming residential mortgages, are unlikely
to be available should a combination of CB Bancshares and CPF take
place. Finally, the hostile nature of the proposal has already offended
CB Bancshares' loyal customer base.
CB Bancshares also announced today that its Board of Directors has set
Wednesday, May 28, 2003 as the date for a Special Meeting of Shareholders for
the purpose of voting on CPF's proposed control share acquisition, a
requirement under Hawaii law. Shareholders of record at the close of business
on May 5, 2003 will be eligible to vote at the Special Meeting. The CB
Bancshares Board unanimously recommends that shareholders vote against the
control share acquisition proposal in order to prevent CPF from proceeding to
acquire CB Bancshares.
CB Bancshares added that it has filed with the Securities and Exchange
Commission a notice of meeting and preliminary proxy materials and expects to
furnish shareholders with these materials shortly.
Following is a letter sent today from Mr. Tokioka to the CPF Board of
Directors:
May 4, 2003
Dear Chairman Arnoldus and Directors of Central Pacific Financial Corp.:
After a full and thorough analysis of your proposal including
consultation with our independent financial and legal advisors, the Board of
Directors of CB Bancshares, Inc. has unanimously rejected your proposal. Our
decision is based on what we believe is in the best interest of our
shareholders, employees, customers, suppliers, the communities we serve, and
the economy of the State of Hawaii. After careful consideration, we have
concluded that the financial terms of your offer fail to recognize the value
that we are capable of delivering to our shareholders through the continued
execution of our current strategy. Your unsolicited proposal undervalues our
franchise, our market position and the loyalty of our customers, and raises
serious concerns about the adverse effect such a combination would have on the
people, communities and economy of Hawaii.
As responsible members of the local business community, it is
incumbent upon us to express our regret over the tactics employed throughout
this ill-advised endeavor. A merger between two major financial institutions
in a place of our size and culture is a serious undertaking that impacts many
thousands of individuals and businesses. A transaction pursued in such an
overtly hostile manner only serves to reduce the value of both of our
franchises.
For all of these reasons and others, we cannot in good faith
offer anything other than a rejection of your proposal. In the spirit of our
founders and for the benefit of both of our constituencies, we ask that you
honor and accept our decision. We would then welcome you back as a worthy
competitor and member of the community.
Sincerely,
/s/ Lionel Y. Tokioka
Chairman of the Board
Sandler O'Neill & Partners, L.P. is serving as financial advisor to CB
Bancshares and Kobayashi, Sugita & Goda, a Honolulu law firm, is serving as
local legal counsel.
CB Bancshares, Inc. is a bank holding company, which provides a full range of
banking products and services for small-and-medium-sized businesses and retail
customers through its principal subsidiary, City Bank. City Bank maintains 21
branches on the islands of Oahu, Hawaii, Maui and Kauai.
This communication may be deemed to include forward-looking statements, such
as statements that relate to CB Bancshares' financial results. Forward-looking
statements are typically identified by words or phrases such as "believe,"
"expect," "anticipate," "intent," "estimate," "may increase," "may fluctuate,"
and similar expressions or future or conditional verbs such as "will,"
"should," "would," and "could." Forward-looking statements are CB Bancshares
current estimates or expectations of future events or future results. For such
statements, CB Bancshares claims the protection of the safe harbor for
forward-looking statements contained in the Private Securities Litigation
Reform Act of 1995. Actual results could differ materially from those
indicated by these statements because the realization of those results is
subject to many risks and uncertainties. CB Bancshares' 2002 Annual Report on
Form 10-K and other periodic reports to the Securities and Exchange Commission
contain additional information about factors that could affect actual results.
All forward-looking statements included in this communication are based on
information available at the time of the release, and CB Bancshares assumes no
obligation to update any forward-looking statement.
_____
The directors and certain executive officers of CB Bancshares may be deemed to
be participants in the solicitation of proxies from the shareholders of CB
Bancshares in connection with CB Bancshares' special meeting of shareholders
(the "Special Meeting") under the Hawaii Control Share Acquisitions Statute.
Information concerning such participants is contained in CB Bancshares'
definitive proxy statement on Schedule 14A relating to CB Bancshares' 2003
Annual Meeting filed with the Securities and Exchange Commission (the "SEC")
on March 12, 2003.
CB Bancshares will file a preliminary proxy statement on Schedule 14A with the
SEC on May 5, 2003 with respect to its solicitation of proxies for use at the
Special Meeting and, subject to future developments, CB Bancshares may file
with the SEC a Solicitation/Recommendation Statement on Schedule 14D-9
relating to any tender/exchange offer made by Central Pacific Financial Corp.
Shareholders of CB Bancshares are advised to read CB Bancshares'
Solicitation/Recommendation Statement on Schedule 14D-9 and CB Bancshares'
proxy statement for the Special Meeting when such documents become available
because they will contain important information. Shareholders of CB Bancshares
and other interested parties may obtain, free of charge, copies of the
Schedule 14D-9 (when available), CB Bancshares's proxy statement and other
documents filed by CB Bancshares with the SEC at the SEC's internet website at
www.sec.gov. Each of these documents (when available) may also be obtained,
free of charge, by calling investor relations at CB Bancshares at
808-546-8413.
# # #
LETTER TO CB BANCSHARES, INC. EMPLOYEES
May 4, 2003
To All Our Employees:
Today, your Board of Directors unanimously rejected the unsolicited and
hostile proposal that was made by Central Pacific Financial Corporation on
April 16. Their decision was based on a thorough evaluation of all of the
impacts of the proposed merger.
Prior to our announcement, we had been bound by our fiduciary duty not to
provide public comment. We know that this period caused undue anxiety to you,
our customers, and your families. Thank you very much for your conscientious
work, your pride, and your fortitude in the last three weeks.
Far from being the win-win situation that was portrayed by Central Pacific's
public relations campaign, the detailed evaluation by your Board of Directors
including consulting with your management and our financial advisor revealed a
proposal that would be damaging to our two companies, and detrimental to the
lives of thousands of people.
We have asked Central Pacific Financial Corporation to honor and accept our
decision. Regrettably however, Central Pacific may very well continue to
attempt to force its will on our shareholders, our customers, and you. We will
keep you closely apprised as the events unfold.
Along with you, we are proud to be a part of our City Bank ohana. By
continuing to grow customers, accounts, loans and relationships, City Bank
will prove itself to be the ultimate winner. We look forward to working with
you to accomplish our goals.
With Respect and Aloha,
Tokioka
Migita
Lim
The directors and certain executive officers of CB Bancshares may be deemed to
be participants in the solicitation of proxies from the shareholders of CB
Bancshares in connection with CB Bancshares' special meeting of shareholders
(the "Special Meeting") under the Hawaii Control Share Acquisitions Statute.
Information concerning such participants is contained in CB Bancshares'
definitive proxy statement on Schedule 14A relating to CB Bancshares' 2003
Annual Meeting filed with the Securities and Exchange Commission (the "SEC")
on March 12, 2003.
CB Bancshares will file a preliminary proxy statement on Schedule 14A with the
SEC on May 5, 2003 with respect to its solicitation of proxies for use at the
Special Meeting and, subject to future developments, CB Bancshares may file
with the SEC a Solicitation/Recommendation Statement on Schedule 14D-9
relating to any tender/exchange offer made by Central Pacific Financial Corp.
Shareholders of CB Bancshares are advised to read CB Bancshares'
Solicitation/Recommendation Statement on Schedule 14D-9 and CB Bancshares'
proxy statement for the Special Meeting when such documents become available
because they will contain important information. Shareholders of CB Bancshares
and other interested parties may obtain, free of charge, copies of the
Schedule 14D-9 (when available), CB Bancshares' proxy statement and other
documents filed by CB Bancshares with the SEC at the SEC's internet website at
www.sec.gov. Each of these documents (when available) may also be obtained,
free of charge, by calling investor relations at CB Bancshares at
808-546-8413.
# # #
SECTIONS FROM CB BANCSHARES' PRELIMINARY PROXY STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION ON MAY 5, 2003
BACKGROUND
Sometime late in 1999 or early in 2000, Bancshares approached CPF on
an informal basis to discuss the possibility of entering into discussions
concerning a business combination. This discussion was preliminary in nature
and was terminated prior to any formal discussion or negotiation.
On or about May 23, 2002, CPF approached Bancshares with an
indication of interest regarding a possible combination between Bancshares and
CPF. The proposed transaction contemplated the acquisition of Bancshares by
CPF in a stock-for-stock merger.
On June 10, 2002, the Executive Committee of the Board of Directors
of Bancshares met with management to discuss CPF's proposal. After careful
consideration, the Executive Committee determined not to pursue the proposal
with CPF. At the request of the Executive Committee, Bancshares delivered a
written response to CPF informing them that Bancshares was not interested in
pursuing further discussions on its proposal.
On March 17, 2003, representatives of Bear, Stearns & Co. Inc. ("Bear
Stearns") met with Ronald K. Migita, President and Chief Executive Officer of
Bancshares, and Dean K. Hirata, Senior Vice President and Chief Financial
Officer of Bancshares. Management of Bancshares believed that the purpose of
the meeting was a business courtesy call. The representatives of Bear Stearns,
identifying themselves as representing CPF, briefly discussed a proposal for
the merger of CPF and Bancshares. The contemplated cash and stock merger
intended to provide $70 in value for each share of Common Stock, comprised of
approximately 30% in cash and 70% in stock.
On March 21, 2003, CPF delivered to Bancshares' senior management a
letter detailing the terms of the transaction proposed in the March 17
presentation. Bancshares' management met with representatives of CPF and Bear
Stearns on April 2, 2003 to seek clarification regarding certain terms of
CPF's proposal. Following that meeting, Bancshares' management believed that
further discussions with CPF's management would not be productive while it
continued to study CPF's proposal.
On or around April 7, 2003, CPF sent another copy of its March 21,
2003 letter to each of the directors of Bancshares and City Bank, Bancshares'
wholly owned banking subsidiary. Bancshares acknowledged receipt of CPF's
April 7, 2003 letter.
On April 15, 2003, before the Bancshares Board of Directors had had
an opportunity to meet to discuss and evaluate CPF's proposal, CPF delivered a
second letter to the members of Bancshares' Board of Directors. In that
letter, CPF indicated that it was prepared to offer 1.8956 shares of CPF
Common Stock plus $21 in cash for each share of Common Stock. CPF also
indicated that it intended to publicly announce its merger proposal the
following day and requested that Bancshares respond to its proposal before
12:00 noon, Hawaii time, on April 25, 2003. CPF also indicated in its April
15, 2003 letter that TON had agreed to vote 295,587 of its shares of Common
Stock in favor of the proposed merger, a possible exchange offer, and other
proposals that could be made to facilitate the transaction. On April 16, CPF
issued a press release announcing its merger proposal and reiterating its
April 25, deadline. On April 17, 2003 CPF held a conference call with analysts
in which it presented the details of its merger proposal.
On April 17, 2003, the Company announced that it had received the
proposal from CPF, and on April 23, 2003 it advised CPF that the Company's
Board would address the merger proposal promptly and in an orderly manner and
would respond in a timely fashion, but not before April 25, 2003. On April 23,
the Company also issued a press release announcing that it had engaged a
financial advisor and legal counsel to assist its Board of Directors and
management team in evaluating CPF's merger proposal.
On April 28, 2003, Bancshares received a notice from CPF demanding
that Bancshares call a special shareholders meeting under the Act for the
purpose of voting upon the Control Share Acquisition Proposal. CPF also
announced that it had filed documents with federal and state regulators in
furtherance of its attempt to seek control of Bancshares.
On April 29, 2003, Bancshares announced that at its Board of
Directors meeting held on April 23, 2003, the Board declared a 10% stock
dividend and a cash dividend of $0.12 per common share for the second quarter
of 2003, payable on June 27, 2003 to stockholders of record on June 16, 2003.
Similar 10% stock dividends were declared in the second quarters of 2001 and
2002.
On May 1, 2003, CPF announced that, in light of the 10% stock
dividend announced by Bancshares on April 29, it was amending its offer so
that the per share amount of cash to be paid and of shares of CPF Common Stock
to be issued pursuant to the Proposed Offer to Exchange was adjusted from
$21.00 to $19.09 in cash and from 1.8956 to 1.7233 shares of CPF Common Stock.
On May 2, 2003, CPF amended and supplemented its prior application
submitted to the Division of Financial Institutions of the Department of
Commerce & Consumer Affairs of Hawaii to include a request that the
Commissioner of the Division approve CPF making a tender/exchange offer,
pursuant to Section 412:3-612(a)(2) of the Hawaii Revised Statutes. CPF cannot
commence its Proposed Offer to Exchange until such application is approved.
On May 4, 2003, the Board of Directors of the Company met with senior
management and the Company's independent financial and legal advisors to
consider and discuss CPF's merger proposal and Bancshares' response. After
careful consideration, the Board concluded that the CPF proposal was
inadequate and not in the best interests of the Company. The Board of
Directors of the Company authorized the issuance of a press release and
delivery of a letter to CPF communicating its determination. Accordingly, on
May 4, 2003, the Company issued a press release announcing the Board's
unanimous rejection of CPF's proposal. In addition, the letter authorized by
the Board of Directors was sent to CPF. A copy of the letter follows:
May 4, 2003
Mr. Clinton K. Arnoldus
Chairman, President and
Chief Executive Officer
Central Pacific Financial Corporation
P. O. Box 3590
Honolulu, Hawaii 96811-3590
Dear Chairman Arnoldus and Directors of Central Pacific Financial Corporation:
After a full and thorough analysis of your proposal including
consultation with our independent financial and legal advisors, the Board of
Directors of CB Bancshares, Inc. has unanimously rejected your proposal. Our
decision is based on what we believe is in the best interest of our
shareholders, employees, customers, suppliers, the communities we serve, and
the economy of the State of Hawaii. After careful consideration, we have
concluded that the financial terms of your offer fail to recognize the value
that we are capable of delivering to our shareholders through the continued
execution of our current strategy. Your unsolicited proposal undervalues our
franchise, our market position and the loyalty of our customers, and raises
serious concerns about the adverse effect such a combination would have on the
people, communities and economy of Hawaii.
As responsible members of the local business community, it is
incumbent upon us to express our regret over the tactics employed throughout
this ill-advised endeavor. A merger between two major financial institutions
in a place of our size and culture is a serious undertaking that impacts many
thousands of individuals and businesses. A transaction pursued in such an
overtly hostile manner only serves to reduce the value of both of our
franchises.
For all of these reasons and others, we cannot in good faith offer
anything other than a rejection of your proposal. In the spirit of our
founders and for the benefit of both of our constituencies, we ask that you
honor and accept our decision. We would then welcome you back as a worthy
competitor and member of the community.
Sincerely,
/s/ Lionel Y. Tokioka
Chairman of the Board
RECOMMENDATION OF THE BANCSHARES BOARD OF DIRECTORS
After careful consideration, including a thorough review
of the CPF proposal and the Proposed Offer to Exchange with Bancshares'
independent financial and legal advisors, the Bancshares' Board of Directors
unanimously determined that the Proposed Offer to Exchange was inadequate and
not in the best interests of Bancshares and that Bancshares shareholders
should vote AGAINST the approval of the Control Share Acquisition.
In reaching the conclusion that the Proposed Offer to
Exchange is inadequate and not in the best interests of Bancshares and the
recommendation described above, the Bancshares Board of Directors consulted
with its senior management and its independent legal and financial advisors
and took into account numerous factors, including but not limited to the
following:
i. The Bancshares Board's familiarity with and review of Bancshares'
business, operations, financial condition and earnings on both an
historical and prospective basis and the historical trading prices
of the Common Stock. In this respect, the Board noted that
Bancshares' financial outlook has improved as a result of, among
other things, positive momentum with compound annual earnings per
share growth of more than 15 percent over the last five years,
continued growth in core deposits and fee income, a declining
efficiency ratio and improved asset quality. The Board also took
into account management's view that, with increased loan loss
reserves and significant funding and capital capacity, Bancshares
is well positioned for future growth and its improved outlook is
not adequately reflected in Bancshares' current stock price.
ii. The written opinion, dated May 4, 2003, of Sandler O'Neill &
Partners, L.P. ("Sandler O'Neill") to the effect that, as of the
date of such opinion and based upon and subject to the matters set
forth therein, the consideration to be offered in the Proposed
Offer to Exchange is inadequate, from a financial point of view, to
the holders of shares of Common Stock, other than CPF and its
affiliates. A copy of the opinion of Sandler O'Neill, which sets
forth the matters considered, assumptions made, and limitations on
the review undertaken by Sandler O'Neill is attached as Annex C
hereto and is incorporated herein by reference. Sandler O'Neill's
opinion is addressed to Bancshares' Board of Directors, addresses
only the inadequacy, from a financial point of view, to the holders
of shares of Common Stock of the consideration to be offered in the
Proposed Offer to Exchange, other than CPF and its affiliates, and
does not constitute a recommendation to any shareholder as to
whether or not such shareholder should tender shares pursuant to
the Proposed Offer to Exchange or with respect to how such
shareholder should vote or act on any matter relating to the
Proposed Offer to Exchange. Shareholders are urged to read the
opinion of Sandler O'Neill carefully in its entirety.
iii. The Bancshares Board's review of the business, operations, earnings
and financial condition of CPF on both a historical and prospective
basis. In this regard, the Bancshares Board took into account the
possibility that CPF will face difficulties sustaining its
historical rate of earnings growth, due to, among other things, the
following factors:
o Concurrent with announcing its merger proposal, CPF management
lowered its estimated range of earnings per share growth to
6%-8% from 10%-12%;
o The increased level of competition in the commercial real
estate market in which CPF operates, particularly in
construction lending, and the possibility that such increased
competition could negatively affect CPF's revenue in the
future;
o CPF's negative interest rate sensitivity "gap" position, which
could reduce its ability to increase leverage and/or
negatively impact its balance sheet if interest rates rise;
o CPF's dependence on share buybacks to help generate earnings
per share growth, including the fact that since 1998 CPF has
repurchased approximately 27% of its shares outstanding and
that share buybacks represented as much as one-third of the
trading volume in CPF's common stock in certain quarterly
reporting periods; and
o The fact that CPF took no loan loss provision in the first
quarter of 2003.
iv. The fact that CPF's senior management team is new and untested,
with three of CPF's top executive officers having assumed their
present offices with CPF in the past year. Furthermore, the
Bancshares Board was advised that Mr. Arnoldus, CEO and President
of CPF, has only 12 months of experience leading a publicly-traded
financial institution and has never managed the process of
consummating a bank acquisition. The Bancshares Board also noted
that CPF recently has undertaken a major organizational
restructuring due to perceived weaknesses in its existing
organizational structure.
v. The fact that, based on a review of publicly available data, CPF
has not completed a single acquisition of another entire financial
institution in the last 25 years and therefore lacks any
institutional experience in successfully completing the delicate
task of merging and integrating the operations of an institution
that is more than three-quarters its size (based on total assets).
In this regard, the board noted that hostile transactions such as
Wells Fargo's acquisition of First Interstate Bancorp in 1996 have
demonstrated that hostile acquisitions present dramatically higher
execution and integration risk than fully consensual transactions
that combine the best management talents of both organizations.
vi. The Bancshares Board's review of the historical trading prices of
CPF Common Stock. In this regard, the Bancshares Board noted,
o the volatility of CPF's common stock price, which during the
last 12 months has fluctuated between $15.75 and $31.08,
suggesting that any premium currently offered to Bancshares
shareholders may not be a reliable indicator of the future
value of the CPF Common Stock that Bancshares shareholders
would receive in the Proposed Offer to Exchange;
o that CPF's common stock was very recently trading at an
all-time high of 2.4 times book value; and
o that the Common Stock outperformed CPF Common Stock over the
three-year period ending April 16, 2003.
vii. The negative effect that an acquisition of Bancshares by CPF can be
expected to have on Bancshares' non-shareholder constituencies,
including its customers, suppliers, communities, employees and the
state of Hawaii. In this regard, the Bancshares Board noted that:
o approximately 10 branches of the combined company would be
consolidated and Bancshares' loan production offices in
California would be closed, which would result in a disruption
in services, loss of jobs, and customer attrition, all of
which could negatively affect the revenue of the combined
company;
o achieving CPF's projected annual cost savings of $16 million
will require a substantial reduction in the workforce, with
many job cuts expected to come from middle managers, branch
personnel and back office employees of Bancshares; and
o Bancshares has a long history of offering financial products
and services that are uniquely targeted to the needs of the
community's low and medium-income clients, and it is unlikely
that CPF would be able to continue these products and
services.
viii. The significant antitrust and anti-competitive concerns that an
acquisition of Bancshares by CPF would raise, especially with
respect to the market for commercial loans to small- and
medium-sized businesses.
ix. The fact that the Proposed Offer to Exchange is highly conditional,
including the following:
o MINIMUM TENDER CONDITION. Valid tender of a number of shares
of Common Stock which, when added to the shares owned by CPF,
constitute at least 75.1% of the outstanding shares of Common
Stock on a totally diluted basis.
o DUE DILIGENCE CONDITION. CPF's completion of satisfactory due
diligence on Bancshares;
o REGULATORY APPROVALS CONDITION. CPF's receipt of all
applicable regulatory approvals required to consummate the
acquisition of Bancshares, including the Federal Reserve Board
and the Hawaii Commissionor of Financial Institutions, and the
expiration or termination of any applicable waiting periods;
o CONTROL SHARE CONDITION. Receipt of the requisite approval of
Bancshares' shareholders under the Act or CPF being satisfied,
in its sole discretion, that such law is inapplicable or
invalid;
o CPF SHAREHOLDER APPROVAL CONDITION. Approval of the issuance
of shares of CPF common stock pursuant to the Bancshares
acquisition by the shareholders of CPF in accordance with the
rules of the New York Stock Exchange;
o RIGHTS PLAN CONDITION. The Board of Directors of Bancshares
having redeemed the rights under Bancshares' shareholder
rights agreement or such agreement having been made or found
inapplicable or illegal;
o NO ADVERSE AGREEMENT OR TRANSACTION CONDITION. Bancshares' not
having entered into or effectuated any other agreement or
transaction with any person or entity having the effect of
impairing CPF's ability to acquire Bancshares or otherwise
diminishing the value of the acquisition of Bancshares; and
o CPF REGISTRATION STATEMENT CONDITION. The registration
statement filed with the Securities and Exchange Commission by
CPF, relating to the securities to be issued in the Proposed
Offer to Exchange, having become effective.
# # #
Subject to future developments, CB Bancshares may file with the SEC a
Solicitation/Recommendation Statement on Schedule 14D-9 relating to any
tender/exchange offer made by Central Pacific Financial Corp. Shareholders of
CB Bancshares are advised to read CB Bancshares' Solicitation/Recommendation
Statement on Schedule 14D-9 when it becomes available because it will contain
important information. Shareholders of CB Bancshares and other interested
parties may obtain, free of charge, copies of the Schedule 14D-9 (when
available) and other documents filed by CB Bancshares with the SEC at the
SEC's internet website at www.sec.gov. Each of these documents (when
available) may also be obtained, free of charge, by calling investor relations
at CB Bancshares at 808-546-8413.