Canadian Imperial Bank of Commerce (CIBC) has entered into a definitive agreement to acquire PrivateBancorp, Inc. and its subsidiary, The PrivateBank, a high-qualityChicago-based middle market commercial bank with US$17.7 billion in assets, complemented by private banking and wealth management capabilities.
The transaction will significantly expand CIBC's reach in North America, and enable PrivateBancorp to continue building on its record of growth and client service under the leadership of its current management team. The acquisition will create a platform for CIBC to deliver U.S. banking services to its existing Canadian personal and business banking clients, accept deposits in the U.S., and provide commercial and private banking services to the clients of Atlantic Trust, following receipt of required approvals. Atlantic Trust, a leading U.S. private wealth management firm serving high net worth families, private foundations and endowments, was acquired by CIBC in fiscal 2014. For PrivateBancorp, the transaction will bring added financial strength, the benefits of a larger banking enterprise and deeper wealth management expertise to its clients across the U.S.
CIBC will pay US$18.80 in cash and 0.3657 of a CIBC common share for each share of PrivateBancorp common stock. Based on the June 28, 2016 closing price of CIBC's common shares on the New York Stock Exchange (US$77.11), the total transaction value is approximately US$3.8 billion (C$4.9 billion) or US$47.00 of value per share of PrivateBancorp common stock at announcement.
PrivateBancorp is a high-quality, client-focused, middle market commercial, private banking, and wealth management organization with community banking capabilities. PrivateBancorp has approximately 1,200 employees, a leading presence in its hometown of Chicago, and a presence in 11 additional attractive U.S. markets. PrivateBancorp's clients include middle market companies, as well as business owners, executives, entrepreneurs and families. PrivateBancorp also delivers specialty banking services to clients in specific industry segments, including healthcare and technology.
"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," said Victor G. Dodig, CIBC President and Chief Executive Officer.
"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."
Mr. Dodig added, "We were attracted to PrivateBancorp for the quality of its management team and its client-first culture, and look forward to PrivateBancorp's continued growth with CIBC's financial backing. With a shared focus to be number one in client relationships, we will work with PrivateBancorp's President and CEO, Larry Richman, and his team as we capitalize on the long-term opportunities ahead for our organizations, people, clients, business partners and the communities we serve."
Since 2007, The PrivateBank's leadership team has driven significant organic growth using a high-touch relationship-based approach, underpinned by strong risk management. As of March 31, 2016 PrivateBancorp had total assets ofUS$17.7 billion and a 9.8 per cent CET 1 ratio. PrivateBancorp has delivered a compounded annual loan growth rate of 16 per cent between year-end 2007 and 2015. Following completion of this transaction, Larry Richman will remain President and CEO of PrivateBancorp and The PrivateBank, will join CIBC's Executive Committee reporting to CEOVictor Dodig, and will take on the role of Head of CIBC's U.S. Region, which will include The PrivateBank, Atlantic Trust, and CIBC's U.S. Corporate Banking Business.
Larry Richman, President and CEO of PrivateBancorp, said, "Our team has built a premier commercial and private banking business. We believe this transaction allows us to not only continue our success but to achieve even more as our clients benefit from CIBC's financial strength, and our employees become part of a respected North American organization that shares our values and is strategically positioned for long-term growth. We look forward to extending U.S. banking services to CIBC's Canadian clients and Atlantic Trust's private wealth clients, in addition to exploring mutual growth opportunities going forward.
"Additionally, CIBC shares our deep commitment to building stronger communities and we are pleased that we will be able to continue our investments in the important areas of financial education, business development and affordable homeownership. Both CIBC and PrivateBancorp are committed to investing in the community and will work together to continue PrivateBancorp's existing programs and seek opportunities to further make a difference in this important area."
Read the June 2016 issue of Business Review USA & Canada magazine