Strategy

Canada’s CIBC to Buy Chicago’s PrivateBancorp

The $3.8 billion deal will significantly expand CIBC's reach in North America and build on its 2013 acquisition of Atlantic Trust.
Katie Kuehner-HebertJune 29, 2016

Canadian Imperial Bank of Commerce said Wednesday it would buy PrivateBancorp for $3.8 billion in a move to significantly expand its reach in North America.

Chicago-based PrivateBancorp, which focuses on commercial banking, private banking and wealth management, serves 12 U.S. markets with about 1,200 employees. The company also provides banking services to clients in specific industry segments, including healthcare and technology.

The deal builds on CIBC’s $210 million acquisition of Atlantic Trust, an Atlanta-based private wealth manager, in 2013.

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“Acquiring PrivateBancorp accelerates our strategy of building a strong, innovative and client-focused bank by creating opportunities to bank across borders for our Canadian clients, and offering more services to our private wealth clients at Atlantic Trust,” CIBC’s chief executive Victor G. Dodig said in a news release.

“We see this as a long-term strategic transaction that creates a platform for growth across North America, expands and deepens our client relationships, and creates a broader, diversified, and more valuable CIBC for our shareholders, our clients, and our team,” he added.

CIBC said it would pay $18.80 in cash and 0.3657 of a CIBC share for each share of PrivateBancorp stock. Based on Tuesday’s CIBC closing price of $77.11, the total transaction value is roughly $47 per PrivateBancorp share, a 31% premium to its Tuesday closing price.

On news of the deal, the stock rose 23.25% to $44.28.

PrivateBancorp’s assets, which consist mostly of loans, have grown from about $5 billion before the financial crisis to more than $17 billion today. According to the Chicago Tribune, the bank ranks eighth in market share in the Chicago area, holding 3.1% of deposits.

Dodig called Chicago one of the most attractive banking markets in the U.S., noting that its high net-worth market is larger than CIBC’s Canadian market.

“Foreign banks still see the United States as offering opportunities for growth that are not found at home, and we expect more interest from both Canadian and Japanese banks,” Lana Chan, a BMO Capital Markets analyst, wrote in a report.