CIBC increased its takeover offer for Chicago-based PrivateBancorp by 20 per cent on Thursday in a bid to win shareholder approval for the takeover deal.
CIBC is increasing its takeover offer for Chicago-based PrivateBancorp by 20 per cent, valuing the US financial services company at about C$6.6 billion.
The fact that that it was reactivated after a five months delay sent a signal - and a possible indication of how much more CIBC was prepared to pay for the USA bank. If successful, the acquisition would be CIBC's biggest.The higher bid shines a light on CIBC's desire to diversify into the USA market yet highlights investor worries about whether the bank might be paying too much for the asset.
In the view of one well-placed market participant a major clue that the plan was on track came about six weeks back when CIBC announced a normal course issuer bid.
PrivateBancorp shares climbed $2.80 Thursday to $59. USA crude settled up 1.7 percent at $50.35 a barrel.
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The new offer substantially increases the chances the deal will get done, noted BNN Commentator Andrew McCreath. "Without a competing bid, it seems like full-and-fair value", said David Neuhauser, managing director of USA hedge fund Livermore Partners, which owns PrivateBancorp shares.
Elsewhere in the financial sector, Toronto-Dominion Bank's chief executive officer told shareholders at the bank's annual meeting that it does not have a "widespread problem" with its sales practices, responding to a report staffers were pressured to meet targets.
PrivateBancorp's shareholders need to approve the deal with a vote scheduled in the middle of May. The deal is expected to be completed in the second quarter, and has the unanimous support of both boards, the firms said.