Canadian Imperial Bank of Commerce’s proposed acquisition of PrivateBancorp Inc. will be voted on by the Chicago-based bank’s shareholders “on or about May 4,” it was announced Monday.
An earlier meeting to vote on the deal scheduled for Dec. 8 was postponed as banks’ shares soared south of the border after the Donald Trump, who has promised to cut banking regulations and the corporate tax rate, was elected president.
PrivateBancorp’s announcement Monday comes after CIBC’s chief executive Victor Dodig said the bank was not giving up on its strategy to expand into the U.S. market but would be “disciplined” and “patient” when deciding to raise the offer.
“(PrivateBancorp)’s better under CIBC ownership, much stronger, (has a) much broader ability to grow across its platform,” he said during a call with analysts on Feb. 23. “So we think we bring a lot to the party, and we think that the long-term strategic interests of their shareholders and our shareholders are best served by coming together.”
If successful, the acquisition would mark CIBC’s largest ever.
CIBC first announced the deal on June 29, 2016. Canada’s fifth-largest bank offered US$18.80 in cash and 0.3657 of a CIBC commmon share for each PrivateBancorp share.
At the time, that worked out to US$47 per share. Based on CIBC’s U.S. share price of US$89.14 at Friday’s close, that now equals roughly US$51.40.
PrivateBancorp’s shares closed at US$57.46 on Friday. The KBW banking index — a benchmark for the U.S. banking sector reflecting 24 major bank stocks — has risen 53.44 per cent from June 29 to March 3.
“While nothing new was announced (on Monday), this does not preclude CIBC from enhancing its offer for PVTB,” said Doug Young, an analyst at Desjardins Capital Markets, in a note to clients on Monday.
Both parties have until June 29 to walk away from the deal without penalty.
CIBC, which reported strong fiscal first quarter earnings last month with net income of $1.4-billion, also left its options open by seeking a normal course issuer bid to buy back up to eight million or two per cent of its common shares over the next 12 months.
“We want to make sure that we have every avenue open to us for our shareholders (for capital deployment),” Dodig told analysts last month. “And we may have to in fact simply be more active in terms of buying back more stock over time if we are not able to consummate that deal, in this period of time.”
Even if the PrivateBancorp deal does not go through, Dodig expects CIBC to deliver 5 per cent earnings-per-share growth. CIBC has “plenty of organic growth to deliver from our existing footprint as well,” he added.