PrivateBancorp Postpones Meeting as Investor Support for CIBC Deal Erodes

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PrivateBancorp in Chicago has postponed a special meeting where investors were set to vote on its sale to Canadian Imperial Bank of Commerce amid growing concern that investors could reject the deal.

The $19 billion-asset PrivateBancorp said in a press release Wednesday that the meeting, originally planned for Dec. 8, will take place next year. The company did not announce a new date for the meeting, only stating that a new record date for shareholders would likely be set for early in the first quarter.

"Our board … and management team remain committed to this transaction and working with CIBC to obtain the required regulatory and shareholder approvals," James Guyette, PrivateBancorp's chairman, said in the release.

"In accordance with the recommendation of our special strategic opportunities committee comprised of independent directors, and with advice from independent legal and financial advisors, we have decided to postpone the vote," Guyette added. "In view of the significant changes to trading market conditions over the past few weeks, we believe it is in the best interests of all of PrivateBancorp's stockholders to have additional time to consider the value and long-term strategic benefits of this transaction."

"We remain committed to this transaction on the agreed terms, which were established by both companies based on our analysis of the fundamental, long-term merits of the combination," Victor Dodig, CIBC's president and CEO, said in a separate release. "We continue to believe the cash-and-stock consideration … provides significant immediate and long-term value to PrivateBancorp shareholders."

A rise in bank stocks since the presidential election has reconfigured the metrics of the year's biggest deal, valued at $3.8 billion when it was announced in late June. At $47 a share, the pricing represented a 31% premium to where PrivateBancorp's shares closed the day before the deal was announced. Now, the deal value now represents a discount to where PrivateBancorp's shares closed earlier this week.

CIBC's stock has increased by 9% since the U.S. presidential election, while U.S. regional bank stocks are up 20%.

As a result, three fund managers have said in the past week that they will vote against the transaction, and three proxy advisory firms are urging others to follow suit, raising the possibility that shareholders could reject the deal when they vote on Thursday.

Industry observers were divided as to whether the delay will prompt CIBC and PrivateBancorp to renegotiated a new price.

Delaying the vote "provides strong evidence that CIBC will increase the offer," likely to at least $55 per share, Mario Mendonca, an analyst at TD Securities, wrote in a note to clients.

However, Lana Chan, an analyst at BMO Capital Markets, questioned whether CIBC had the "stomach" to meaningfully boost its offer.

It is also notable that the new record date is likely to be early in the first quarter, meaning that investors who purchased PrivateBancorp's stock in recent days will now have a vote at the meeting, Christopher McGratty, an analyst at Keefe, Bruyette & Woods, wrote in a research note. He emphasized that a higher consideration "would likely be necessary to achieve the necessary votes for approval."

At the same time, PrivateBancorp would be fine on its own if a deal never gets done, Terry McEvoy, an analyst at Stephens Inc., said.

PrivateBancorp "was far from being a broken institution," McEvoy said. "Growth has been accelerating and nothing in my view has changed that would impact their business model."

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