CIBC raises offer for PrivateBancorp – Finance News

on May7

4 May 2017 | 10:00 am

For a second time, the Canadian bank that wants to buy PrivateBancorp has raised its price.

Clearly fearing that a shareholder vote scheduled for May 12 would result in rejection, Toronto-based CIBC announced today that it’s upped its bid by $3 per share in cash. That brings the value of the offer to $60.43 in cash and stock, based on CIBC’s share price at yesterday’s close.

CIBC’s bid now comprises about 55 percent stock and 45 percent cash.

The deal has been languishing since it was unveiled nearly a year ago. The November election sent U.S. bank stocks soaring, but Canadian bank stocks haven’t enjoyed the same surge. With its share price tethered to CIBC’s, PrivateBancorp hasn’t participated fully in the good fortune. That’s led some shareholders, and prominent proxy advisory firm Institutional Shareholder Services, to urge a “no” vote on the deal.

When CIBC first discussed raising its bid in March, PrivateBancorp’s board told CEO Victor Dodig that $60 per share was the minimum needed to win approval, according to a Securities & Exchange Commission filing. The increased offer, unveiled March 30, barely topped that level. But CIBC shares have slid since then, eroding the offer, which stood at $57.43 at yesterday’s close.

This third offer values PrivateBancorp at $4.9 billion.

The question now is how CIBC shareholders will respond to yet another raised bid. If CIBC shares fall significantly in response, that easily could bring the value of the deal back under the $60 mark that PrivateBancorp’s board flagged as crucial in March.

CIBC said the deal won’t add to its earnings until the third year after the deal closes.



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