Big bank finds regional buyer for regional asset
CIBC to sell FirstCaribbean stake for $797M (U.S.)
CANADIAN IMPERIAL Bank of Commerce has reached an agreement to sell a significant portion of its majority stake in CIBC FirstCaribbean to GNB Financial Group Ltd. Under the terms of the agreement, GNB is acquiring 66.73 per cent of FirstCaribbean shares from CIBC for total consideration of $797-million (U.S.), which represents a company valuation of approximately $1,195,000,000 (U.S.), subject to closing adjustments to reflect certain changes in FirstCaribbean’s book value prior to closing. “We continue to build a relationship-oriented bank for a modern world and this strategic transaction will sharpen our focus on our core businesses,” said Shawn Beber, senior executive vice-president of general counsel and corporate development at CIBC. “FirstCaribbean is a well-performing business and we believe this transaction will support its long-term growth prospects, while creating value for its stakeholders, as well as those of CIBC. As an in ves tor in FirstCaribbean, we intend to work closely with GNB Financial Group to support continued growth for the business.” “FirstCaribbean will remain the strong entity it is today, committed to servicing its cli
ents in the region,” said Jaime Gilinski, chairman of GNB Financial Group. “I have been impressed by the strength and stability of FirstCaribbean and am excited about its prospects for the future.” GNB is wholly owned by Starmites Corp. SARL, the financial holding company of the Gilinski Group. The Gilinski Group has banking operations in Colombia, Peru, Paraguay, Panama and Cayman Islands, with approximately $15-billion (U.S.) in combined assets.
The total consideration comprises approximately $200-million (U.S.) in cash and secured financing provided by CIBC for the remainder. Following the close of the transaction, CIBC will remain a 24.9-per-cent minority shareholder of FirstCaribbean and will benefit from various minority shareholder protections, as well as liquidity rights in respect of its minority stake.
CIBC’s common equity Tier 1 capital ratio is expected to improve by over 40 bps on closing. The transaction is expected to result in an after-tax loss of approximately $135-million that will be recognized in the fourth quarter of 2019, representing a reduction of the carrying value of goodwill related to FirstCaribbean. Upon closing, CIBC will realize accumulated foreign currency translation gains relating to FirstCaribbean, estimated to be approximately$280-million based on exchange rates as of Oct. 31, 2019, and will also recognize the impact of any closing adjustments and its minority stake.
The agreement is expected to be completed in 2020, subject to satisfaction of customary closing conditions, including receipt of regulatory approvals, and both CIBC and GNB are working closely to ensure a smooth transition for clients and team members.
We seek Safe Harbor.
Karen Baxter condensed this news release ([email protected]watch.com).
Brent Stanley Belzberg, Nanci Ellen Caldwell, Michelle L Collins, Patrick Darold Daniel, Luc Desjardins, Victor George Dodig, Linda S HasenfratzGuelph, Kevin James Kelly, Christine E Larsen, Nicholas D’Orr Le Pan, John Paul Manley, Jane Leslie Peverett, Katharine Berghuis Stevenson, Martine Turcotte, Barry L Zubrow
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