Canadian Imperial Bank Of Commerce Buys PrivateBancorp For $47.00 A Share

Canadian Imperial Bank of Commerce CM revealed it struck a definitive agreement to buy PrivateBancorp, Inc. PVTB and its subsidiary, The PrivateBank, for $47.00 a share. According to the company, the offer would be in the form of US$18.80 cash and 0.3657 CIBC share for each share of PrivateBancorp. Based on July 28 closing price of CIBC, the transaction was valued either US$3.8 billion or C$4.9 billion.

According to Canadian Imperial Bank, the transaction could be accretive to its adjusted earnings per share in the third year. The company added that PrivateBancorp would remain headquartered in Chicago and retain its Illinois state banking charter.

The company indicated the total consideration value would be based in part on the value of CIBC common shares at closing. It would satisfy aggregate consideration payable to PrivateBancorp stockholders by paying about $1.5 billion in cash and issuing approximately 29.5 million CIBC common shares. That means stock component would be 60 percent and the remaining 40 percent would be cash. The company expects the transaction to close in the first quarter of the next year.

CIBC's President and CEO, Victor Dodig, commented, "Acquiring PrivateBancorp accelerates our strategy of building a strong, innovative and client-focused bank by creating opportunities to bank across borders for our Canadian clients, and offering more services to our private wealth clients at Atlantic Trust."

He continued to add, "We were attracted to PrivateBancorp for the quality of its management team and its client-first culture, and look forward to PrivateBancorp's continued growth with CIBC's financial backing. With a shared focus to be number one in client relationships, we will work with PrivateBancorp's President and CEO, Larry Richman, and his team as we capitalize on the long-term opportunities ahead for our organizations, people, clients, business partners and the communities we serve."

Canadian Imperial Bank believes that the transaction would expand its reach in North America significantly and allow PrivateBancorp to continue building on its record of growth and client service under its current management team. The company added that the acquisition would establish a platform for CIBC to deliver American banking services to its existing Canadian personal and business banking clients, accept deposits in the U.S., and provide commercial and private banking services to the clients of Atlantic Trust, following receipt of required approvals.

Incidentally, in fiscal 2014, CIBC acquired Atlantic Trust, a leading U.S. private wealth management firm serving high net worth families, private foundations and endowments. As far as PrivateBancorp was concerned, the transaction would bring added financial strength, the gains of a bigger banking enterprise and deeper wealth management expertise to its clients in the United States.

PrivateBancorp is said to be a high-quality middle market commercial bank. It has assets worth $17.7 billion supported by its private banking, as well as, wealth management capabilities. It has about 1,200 workforces with a presence in eleven attractive markets in the United States. Its clients included middle market companies, and business owners, executives, entrepreneurs and families.

Following the news, PVTB traded 26.4 percent higher in the pre-market on Wednesday.