Why PrivateBancorp Stock Is Surging Today

By Markets Fool.com

Image source: Private Bancorp.

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What: Shares of PrivateBancorp are surging by nearly 23% as of 10:30 a.m. ET as the company entered into an agreement to be acquired by Canadian bank CIBC .

So what: The deal calls for CIBC to pay $18.00 in cash and 0.3657 shares of CIBC for every share of PrivateBancorp stock, which amounts to about $45.36 per PrivateBancorp share at the most recent trading price. That's slightly lower than the $47.00 per share figure given in the press release due to a slight decline in CIBC's share price since the announcement.

CIBC finds PrivateBancorp's focus on middle-market commercial clients to be an attractive platform on which it can grow its U.S. operations. Notably, PrivateBancorp has grown its loans at a 16% annualized clip since the peak of the last cycle in 2007.

Now what: Investors expect the deal to go through without a hitch. PrivateBancorp shares trade at a modest 2.8% discount to the offered price, a very small discount for a deal that isn't expected to close until the first quarter of 2017.

The article Why PrivateBancorp Stock Is Surging Today originally appeared on Fool.com.

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Jordan Wathen has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.