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The large CIBC sign outside the bank's office building at the southeast corner of King St. West and Bay St. in Toronto’s financial district.Fred Lum/The Globe and Mail

Canadian Imperial Bank of Commerce's chief executive officer is confident investors will bless his $4.9-billion bid for Chicago-based PrivateBancorp next week, despite the objection of one major proxy adviser.

In June, CIBC agreed to acquire PrivateBancorp, a private and commercial bank with about 18-billion (U.S) in assets, for a mix of cash and stock. If approved, the deal will be the biggest in CIBC's history and will boost the bank's presence in the U.S., recasting the perception that it is overly exposed to Canada.

With the Dec. 8 investor vote approaching, Institutional Shareholder Services Inc. has recommended that PrivateBancorp's owners reject the deal. Large institutional investors like pension plans and mutual funds routinely rely on the opinions of these proxy advisers because they don't have the resources to study every deal that companies they own are involved in.

ISS said little about the deal's strategy. Instead, it made its case largely based on valuation. CIBC agreed to buy PrivateBancorp at a 30.8 per cent premium, but ISS believes "support for this proposal is not warranted given that the premium originally offered to PVTB shareholders no longer appears compelling."

The KBW Regional Bank Index, a benchmark for PrivateBancorp shares, has jumped 40 per cent since the deal was first announced – and most of it has come since Donald Trump was elected president. U.S. bank stocks have been soaring because investors assume regulations will start to loosen, but there is no guarantee they will.

CIBC's offer values PrivateBancorp's shares at $47.00. On Thursday afternoon, its stock traded for $48.70 – up four per cent on the day.

Adding some extra uncertainty, Glazer Capital, a small New York-based hedge fund with $1.4-billion in assets under management, put out a press release Thursday arguing CIBC needs to pay more to get the deal done. Glazer said it owns one million PrivateBancorp shares.

Earlier in the day, CIBC CEO Victor Dodig reiterated his optimism for shareholder approval during a quarterly earnings conference call. "The transaction offers significant long-term value for both companies that far outweighs recent short-term, and potentially short-lived, swings in the U.S. banking sector valuation," he told analysts.

"I think shareholders of The PrivateBank and The PrivateBank management team feel very good about the transaction that we put forward," he added. PrivateBancorp is commonly known as The PrivateBank.

Two other proxy advisory firms agree with Mr. Dodig. Glass, Lewis & Co. and Egan-Jones Proxy Services both said they're in favour of the deal and recommended that Privatebancorp's shareholders vote for it to be approved.

Rather than focus on market swings, which could be short-lived, Glass Lewis said the proposed merger likely represents "the best strategic alternative available." Regional banks in the U.S. have been riding a wave of consolidation, as the sector grapples with more red tape and increased costs.

"By merging with a relatively larger bank in CIBC, PrivateBancorp should benefit from the increased scale of the combined company, as well as the potential to realize merger-related synergies," the proxy adviser wrote.

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