Canadian Imperial Bank of Commerce has increased its offer in its pending purchase of Chicago-based PrivateBancorp Inc.
Under an amended merger agreement, PrivateBancorp stockholders would receive US$24.20 in cash and 0.4176 of a CIBC common share for each common share of PrivateBancorp. CIBC expects to pay approximately US$1.9 billion in cash and issue approximately 33.5 million common shares, representing a mix of 40% cash and 60% stock.
Based on CIBC's closing price on the New York Stock exchange on March 29, the new terms value PrivateBancorp at US$4.9 billion, or US$60.92 per share, the companies said in a press release.
The change represents 2.7x PrivateBancorp's tangible book value, they said. The original merger agreement was valued at US$3.8 billion, or US$47.00 per share, by the companies at the time of its announcement, and the new agreement is valued at US$4.9 billion, or US$60.92 per share.
The termination fee, payable from PrivateBancorp to CIBC, was increased to US$198 million from the original US$150 million.
After bank stocks shot higher in late 2016, shareholders and proxy firms said the deal no longer valued PrivateBancorp properly and may have held back its shares as the broader industry rallied. PrivateBancorp delayed its shareholder vote on the merger, which was originally scheduled for December 2016.
PrivateBancorp shareholders are now set to vote on the merger in mid-May, the release stated. The record date to be an eligible stockholder in the vote is March 31. The companies expect to complete the merger in the second quarter.
CIBC estimated that the deal would contribute approximately US$340 million to its net income in fiscal 2020 and become accretive to its earnings per share within three years.