CIBC (CM) to Acquire PrivateBancorp (PVTB) in ~$3.8B Deal
- S&P 500, Nasdaq fall as tech shares give up gains
- AI boom could continue to drive S&P 500 higher - Goldman
- Deutsche Bank, Wells Fargo expect US recession to start in Q4 2023
- Cathie Wood buys the dip in Coinbase shares amid SEC crackdown
- United Natural Foods (UNFI) cuts its forecast after FQ3 earnings miss; Shares crash 25%
Get Alerts CM Hot Sheet
Join SI Premium – FREE
Get instant alerts when news breaks on your stocks. Claim your 1-week free trial to StreetInsider Premium here.
CIBC (NYSE: CM) announced that it has entered into a definitive agreement to acquire PrivateBancorp, Inc. (Nasdaq: PVTB) and its subsidiary, The PrivateBank, a high-quality Chicago-based middle market commercial bank with US$17.7 billion in assets, complemented by private banking and wealth management capabilities.
The transaction will significantly expand CIBC's reach in North America, and enable PrivateBancorp to continue building on its record of growth and client service under the leadership of its current management team. The acquisition will create a platform for CIBC to deliver U.S. 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. Atlantic Trust, a leading U.S. private wealth management firm serving high net worth families, private foundations and endowments, was acquired by CIBC in fiscal 2014. For PrivateBancorp, the transaction will bring added financial strength, the benefits of a larger banking enterprise and deeper wealth management expertise to its clients across the U.S.
CIBC will pay US$18.80 in cash and 0.3657 of a CIBC common share for each share of PrivateBancorp common stock. Based on the June 28, 2016 closing price of CIBC's common shares on the New York Stock Exchange (US$77.11), the total transaction value is approximately US$3.8 billion (C$4.9 billion) or US$47.00 of value per share of PrivateBancorp common stock at announcement.
PrivateBancorp is a high-quality, client-focused, middle market commercial, private banking, and wealth management organization with community banking capabilities. PrivateBancorp has approximately 1,200 employees, a leading presence in its hometown of Chicago, and a presence in 11 additional attractive U.S. markets. PrivateBancorp's clients include middle market companies, as well as business owners, executives, entrepreneurs and families. PrivateBancorp also delivers specialty banking services to clients in specific industry segments, including healthcare and technology.
"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," said Victor G. Dodig, CIBC President and Chief Executive Officer.
"We see this as a long-term strategic transaction that creates a platform for growth across North America, expands and deepens our client relationships, and creates a broader, diversified, and more valuable CIBC for our shareholders, our clients, and our team."
Mr. Dodig added, "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."
Since 2007, The PrivateBank's leadership team has driven significant organic growth using a high-touch relationship-based approach, underpinned by strong risk management. As of March 31, 2016 PrivateBancorp had total assets of US$17.7 billion and a 9.8 per cent CET 1 ratio. PrivateBancorp has delivered a compounded annual loan growth rate of 16 per cent between year-end 2007 and 2015. Following completion of this transaction, Larry Richman will remain President and CEO of PrivateBancorp and The PrivateBank, will join CIBC's Executive Committee reporting to CEO Victor Dodig, and will take on the role of Head of CIBC's U.S. Region, which will include The PrivateBank, Atlantic Trust, and CIBC's U.S. Corporate Banking Business.
Larry Richman, President and CEO of PrivateBancorp, said, "Our team has built a premier commercial and private banking business. We believe this transaction allows us to not only continue our success but to achieve even more as our clients benefit from CIBC's financial strength, and our employees become part of a respected North American organization that shares our values and is strategically positioned for long-term growth. We look forward to extending U.S. banking services to CIBC's Canadian clients and Atlantic Trust's private wealth clients, in addition to exploring mutual growth opportunities going forward.
"Additionally, CIBC shares our deep commitment to building stronger communities and we are pleased that we will be able to continue our investments in the important areas of financial education, business development and affordable homeownership. Both CIBC and PrivateBancorp are committed to investing in the community and will work together to continue PrivateBancorp's existing programs and seek opportunities to further make a difference in this important area."
Additional Transaction Details
The total value of the consideration that PrivateBancorp common stockholders will receive upon the closing of the transaction will be based in part on the value of CIBC common shares at closing. CIBC will satisfy aggregate consideration payable to PrivateBancorp stockholders by paying approximately US$1.5 billion in cash and issuing approximately 29.5 million CIBC common shares, representing an approximately 60 per cent stock and 40 per cent cash mix.
CIBC anticipates completing the transaction during the first calendar quarter of 2017, subject to satisfaction of customary closing conditions, including approval by PrivateBancorp's shareholders and receipt of regulatory approvals.
CIBC expects to maintain a Common Equity Tier (CET) 1 ratio at closing of at least 10 per cent. CIBC's CET 1 ratio was 10.4 per cent as at April 30, 2016 and since has been further strengthened by the receipt of net proceeds of the sale of our interest in American Century Investments.
The transaction is expected to be accretive to CIBC's adjusted earnings per share in year 3.
PrivateBancorp will remain headquartered in Chicago and retain its Illinois state banking charter. CIBC will continue all of PrivateBancorp's community investment and charitable programs, and Larry Richman President and Chief Executive Officer and the PrivateBancorp executive team will continue to lead PrivateBancorp's efforts to support entrepreneurship, provide financial solutions and to serve all of its communities.
J.P. Morgan Securities LLC and CIBC World Markets Inc. served as financial advisors to CIBC in this transaction and J.P. Morgan Securities LLC provided a fairness opinion to the Board of Directors of CIBC. Goldman, Sachs & Co. served as exclusive financial advisor to PrivateBancorp and Sandler O'Neill & Partners, L.P. provided a fairness opinion to its Board of Directors.
Mayer Brown LLP, Sidley Austin LLP and Torys LLP acted as external counsel to CIBC in connection with the Transaction, while Wachtell, Lipton, Rosen & Katz and Vedder Price acted as external counsel to Private Bancorp.
A conference call is scheduled to take place on June 29, 2016 at 8:00 a.m. (ET), followed by a brief question and answer period with analysts. Presentation materials will be available at www.cibc.com.
Interested parties can access this call on a listen-only basis via telephone in English (416-340-2217 or toll-free 1-866-696-5910, passcode 8001339) and French (514-861-2909 or toll-free 1-877-405-9213, passcode: 6400958).
A live audio webcast of the conference call will also be available in English (http://bell.media-server.com/m/p/bgaz5iuc and French http://bell.media-server.com/m/p/bgaz5iuc/lan/fr).
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- Viant Technology Inc. (DSP) on watch on merger rumors
- United Natural Foods (UNFI) cuts its forecast after FQ3 earnings miss; Shares crash 25%
- Treehouse Foods (THS) to Acquire Farmer Brothers' (FARM) Northlake, Texas Coffee Facility for $100M
Create E-mail Alert Related CategoriesCorporate News, Hot Corp. News, Hot M&A, Management Comments, Mergers and Acquisitions
Related EntitiesJPMorgan, CIBC, Sandler O'Neill, Twitter, Earnings, Definitive Agreement
Sign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!