Canadian Imperial Bank of Commerce again sweetened its offer for PrivateBancorp Inc., its latest attempt to win over the shareholders of the Chicago-based bank.
The new offer, announced Thursday, would give PrivateBancorp shareholders the same amount of stock, but it increases the amount of cash. It now values PrivateBancorp at $60.43 per share, or $4.9 billion overall, based on Wednesday's closing price. It is the second time in five weeks that CIBC has increased its offer.
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CIBC's attempts to purchase PrivateBancorp have been fraught with turmoil, including a rise in U.S. bank stocks after the election that caused PrivateBancorp shareholders to protest the original offer as too low. More recently, CIBC's own shares have declined along with the rest of Canadian banking stocks amid the fallout from a run on deposits at Canadian lender Home Capital Group Inc.
CIBC's second offer, in March, was worth about $61 a share when it was first made. It was worth $57.43 by Wednesday's close. CIBC's initial offer, made more than 10 months ago, valued PrivateBancorp at $47 a share.
Thursday's announcement was made by both banks. CIBC also said that PrivateBancorp shareholders will be eligible for the next CIBC dividend. PrivateBancorp shareholders will meet in Chicago next week to vote on whether to sell the bank to CIBC.
The deal still needs approval from some regulators in the U.S. and Canada. The banks said Thursday that Illinois regulators had given their approval this week. The banks said they "are confident that the remaining closing conditions" will be met.
Christopher McGratty, an analyst at Keefe, Bruyette & Woods, said that the new offer could help secure shareholder votes. But he also noted that it is almost exactly the same implied value as the March offer at the time it was made. Mr. McGratty added that he believes that CIBC's stock performance over the next week "could ultimately be the deciding factor."
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Another driver is the increased push by major Canadian companies into global markets. CIBC chief Victor Dodig told analysts on a call last summer that many of the bank's corporate clients also do business with Canadian and international banks with U.S. operations. CIBC's business with them would "atrophy," he said, if it failed to diversify outside of Canada.
"Canadian Imperial Sweetens Its Offer for PrivateBancorp -- Update," published at 10:45 a.m. ET, didn't specify that Mr. Dodig was referring to the bank's U.S. business when he told analysts on a call last summer that the bank's U.S. business would "atrophy" if the bank didn't diversify out of Canada.
(END) Dow Jones Newswires
May 04, 2017 17:58 ET (21:58 GMT)