PrivateBancorp shareholders approve $4.9B CIBC takeover

PrivateBancorp investors approved a $4.9 billion takeover by Canadian Imperial Bank of Commerce after the Toronto-based lender sweetened its deal twice to win over shareholders.

The majority of PrivateBancorp shareholders endorsed CIBC's bid, the Chicago-based lender said Friday in a statement following a vote at a special meeting. CIBC first proposed the acquisition on June 29, and in its latest offer agreed to pay $27.20 in cash and 0.4176 of a CIBC common share for each PrivateBancorp share.

"This strategic combination creates meaningful value for stockholders, and we look forward to completing the transaction in June," said James Guyette, PrivateBancorp chairman.

CIBC signage
CIBC headquarters stands on Bay Street in Toronto on Monday August 29, 2011. Bay Street is the centre of Toronto's Financial District and is often used by metonymy to refer to Canada's financial industry Photographer: Brent Lewin/Bloomberg

CIBC shares fell 0.1 percent to C$107.17 at 10:24 a.m. in Toronto, while PrivateBancorp rose 0.2 percent to $59.60 in New York.

"I'm sure CIBC management is happy to have won shareholder approval given the difficulty in getting it," said Ian Nakamoto, an equity specialist with Raymond James Ltd. "It certainly makes sense to diversify outside of Canada as they are a relatively large player in Canada."

CIBC, Canada's fifth-largest lender by assets, pursued the deal to expand its commercial and private-banking business in the U.S. and leverage its wealth management platform in the country. Chicago-based PrivateBancorp, with about $20.4 billion in assets, serves mostly middle-market companies, business owners and wealthy families.

CIBC initially offered to buy PrivateBancorp in June for about $3.8 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 boosted its offer by about 20 percent in March after some investors and proxy advisory firms called the bid inadequate, then increased the cash portion by $3 a share, or 12 percent, on May 4 to try and win approval.

Institutional Shareholder Services Inc. last week urged PrivateBancorp investors to vote against CIBC's offer, saying the deal's terms offered no protection should CIBC shares fall on heightened concerns over Canada's housing market. Advisory firms Glass, Lewis & Co. and Egan-Jones Ratings Co. both supported the deal.

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