CIBC ups ‘final’ bid for U.S. lender
The Canadian Imperial Bank of Commerce has sweetened its bid to acquire Chicago-based PrivateBancorp Inc. for the second time, adding an additional US$3 in cash for each share of common stock held.
The amended agreement released Thursday — roughly one week before PrivateBancorp shareholders were due to vote on CIBC’s already sweetened offer — values the U.S. bank at about US$4.9 billion, or $6.8 billion, based on Wednesday’s closing price for CIBC’s common shares on the New York Stock Exchange of US$79.58.
That represents a 26 per cent increase in value compared to the initial terms announced in June 2016, the companies said.
“CIBC affirmed that the terms of the Amended Agreement represent CIBC’s best and final offer to the PrivateBancorp stockholders,” the banks said in a joint release Thursday.
PrivateBancorp’s board of directors unanimously recommended that stockholders vote in favour of the merger, the companies said. Shareholders were scheduled on May 12 to vote on CIBC’s revised offer announced in March.
CIBC had upped its bid for PrivateBancorp Inc. on March 30, offering another 20 per cent on top of its initial offer made on June 29, 2016, to reflect soaring valuations of U.S. bank stocks in the wake of Donald Trump’s election.
This additional US$3 — which in the aggregate will be equal to $27.20 in cash and 0.4176 of a CIBC common share for each share of common stock of PrivateBancorp held — is a “last push to get the deal over the line,” said John Aiken, an analyst with Barclays in Toronto.
“We believe that this does materially increase the likelihood of success, particularly with the added benefit of potentially delaying its quarterly dividend payment to ensure that PVTB shareholders receive their first CIBC dividend right off the bat,” he said in a note to clients.
If successful, the acquisition of PrivateBancorp would mark CIBC’s largest ever. The Canadian lender has the smallest international footprint among its peers, and this foray into the U.S. market would give CIBC exposure to expected growth and rising interest rates south of the border while the economy at home slows.