TORONTO May 12 PrivateBancorp
shareholders on Friday voted to approve a C$4.9 billion ($3.6
billion) purchase by Canadian Imperial Bank of Commerce,
ending an 11-month takeover saga.
CIBC, which is the most domestically focused of Canada's
largest banks, has coveted a major U.S. acquisition to diversify
from its home market. CIBC has the largest exposure among
Canada's major banks to residential mortgages and would be hit
hard if fears of a housing bubble materialize.
The acquisition of Chicago-based PrivateBancorp, which
focuses on commercial and high net worth clients, will give CIBC
a platform for further U.S. expansion and provide its Canadian
clients with U.S. banking services.
CIBC shares were down 0.3 percent, while PrivateBancorp
stock was up 0.1 percent at $59.54.
The deal would contribute more than 10 percent of CIBC's net
income in the near term and over one-quarter over time, Victor
Dodig, CIBC president and chief executive officer, has said.
CIBC had increased its offer twice to try to win the support
of PrivateBancorp shareholders after an earlier stockholder vote
was postponed in December after some investors said they would
reject the deal.
The initial $3.8 billion offer, pitched last June at what
was then a healthy premium to PrivateBancorp's market value,
seemed set to be completed smoothly before Donald Trump's
victory in the U.S. presidential election in November sent U.S.
banking shares soaring.
After Trump's election analysts expected higher interest
rates, lighter banking regulation and a lower corporate tax
rate. That boosted PrivateBancorp shares by more than one-third
and left CIBC with no choice but to pay more if it wanted to
complete the deal.
CIBC raised its takeover offer by 20 percent to about $4.9
billion in March.
However, CIBC's U.S.-listed shares subsequently fell by
nearly 10 percent, reducing the value of the share-based
component of the offer.
Last week, CIBC said it would offer an additional $3 in cash
for each PrivateBancorp share, raising that element to $27.20
per share. It left the stock component unchanged at 0.4176 of
its shares for each of the U.S. bank's shares.
The Canadian bank also pushed back the cutoff date for
shareholders to receive its next quarterly dividend so that
PrivateBancorp investors will be eligible for the payout, worth
39 cents per PrivateBancorp share, based on last quarter's
(Reporting by Matt Scuffham; Editing by Jeffrey Benkoe)