CIBC boosts PrivateBancorp offer, lifting cash portion by 12%

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Canadian Imperial Bank of Commerce increased its offer for PrivateBancorp Inc. by $3 a share in cash to offset the decline in the bidder's stock price.

The new agreement would pay PrivateBancorp investors $27.20 in cash and 0.4176 of a CIBC share for each of their shares, according to a joint statement Thursday by the companies. Based on Wednesday's CIBC closing price, the deal would be valued at about $4.9 billion, or $60.43 a share, a 26 percent increase over the terms announced in June.

The revised offer mean that the cash portion will amount to about 45 percent of the bid price, or $2.2 billion, the Toronto-based lender said, adding that amended terms were the bank's "best and final offer."

The decision comes after proxy advisory firm Institutional Shareholder Services Inc. recommended investors of Chicago-based PrivateBancorp vote down the deal based in part on the decline in CIBC's shares.

The new terms also allow PrivateBancorp's shareholders to participate in the next quarterly dividend to be paid by CIBC after the merger. The companies said they expect the transaction to completed by June.

PrivateBancorp shareholders are scheduled to vote on the offer at a special meeting May 12.

CIBC had offered to buy PrivateBancorp in June for about $3.96 billion in cash and stock, but the U.S. firm delayed a Dec. 8 shareholder vote after its share price climbed along with other U.S. financial companies following Donald Trump's election. The Canadian lender raised its offer by about 20 percent in March after some investors and proxy advisory firms called the bid inadequate.

CIBC, Canada's fifth-largest lender by assets, is pursuing the takeover to expand its commercial and private-banking business in the U.S. and leverage its wealth-management platform in the country. PrivateBancorp, with about $20 billion in assets, serves mostly middle-market companies, business owners and wealthy families.

Bloomberg News