Chicago-based PrivateBancorp Inc. has set a new date when shareholders will determine whether to accept a takeover offer from Canadian Imperial Bank of Commerce.
The U.S. bank said Monday that votes will be tallied at a special meeting "on or about May 4, 2017."
Last June, CIBC made a bid to buy PrivateBancorp, often called PrivateBank, for a mix of cash and stock that was worth $4.9-billion (Canadian), or about $47 (U.S.) a share at the time. The proposed acquisition is the core of CIBC's strategy to expand its presence in the United States at a moment when several Canadian banks are looking south of the border for opportunities to grow.
After the U.S. election, PrivateBank watched its stock price soar in step with other U.S. bank shares, which effectively wiped out the premium CIBC had offered to pay. PrivateBancorp executives then chose to postpone a Dec. 8 shareholder vote, casting doubt over the deal's fate. Three proxy firms had urged investors to reject the terms of CIBC's offer, given the runup in bank valuations. PrivateBank's share price closed at $57.46 on the Nasdaq exchange on Friday.
At CIBC's current share price of about $89 on the New York Stock Exchange, its offer would be worth about $4.1-billion, or more than $51 a share today.
"As we have stated previously, we look forward to realizing the significant strategic benefits to both companies and their shareholders by completing this transaction," a CIBC spokeswoman said. "Today's announcement of a new meeting date is the next step in this process."
On Feb. 23, after CIBC reported a healthy rise in fourth-quarter profit, chief executive officer Victor Dodig sought to reassure investors.
"We will be disciplined. We will be patient. We have plenty of organic growth to deliver from our existing footprint as well," he told analysts.
The bank also took extra steps to soothe shareholders, boosting its quarterly dividend by 3 cents to $1.27 (Canadian) a share, then paving the way to buy back up to 2 per cent of outstanding shares. The buyback plan gives CIBC options – to return capital to shareholders if the deal fails, or if it goes through, to purchase shares from PrivateBank investors looking to exit.
With CIBC's common equity Tier 1 capital ratio – a key measure of financial health – sitting at a plump 11.9 per cent, "it is possible that [CIBC] could offer more cash and pay an even higher price," said Darko Mihelic, an analyst at RBC Dominion Securities Inc., in a research note.
There is only so much time for patience, however, with a June 29 deadline to either seal the deal or walk away. In the meantime, CIBC has said it is continuing with regulatory and integration work to lay the groundwork for a tie-up.
"The PrivateBank is a very good bank. It's a good standalone bank. It's better under CIBC ownership, much stronger, much broader ability to grow across its platform," Mr. Dodig said in late February. "So we think we bring a lot to the party."