Canadian Imperial Bank of Commerce (CIBC) has reached an agreement to acquire Chicago-based PrivateBancorp for $3.8bn in a cash-and-share deal.
The acquisition will help CIBC to gain access to lucrative wealth management market in the US.
PrivateBancorp is a middle market commercial, private banking, and wealth management organization with community banking capabilities.
As of March 31, 2016 PrivateBancorp had total assets of $17.7bn. The bank posted a compound annual loan growth rate of 16% between year-end 2007 and 2015.
Currently, the bank employs nearly 1,200 people and has a presence in 11 attractive markets in the US, apart from its operations in Chicago.
CIBC president and chief executive officer Victor Dodig said: "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.
"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."
Following completion of this transaction, Larry Richman will continue to remain as the president and CEO of PrivateBancorp.
The transaction represent an approximately 60% stock and 40% cash mix. CIBC will pay $1.5bn in cash and issue approximately 29.5 million common shares to PrivateBancorp stockholders.
CIBC expects the transaction to be completed in the first quarter of 2017.
The deal is subject to satisfaction of customary closing conditions, including approval by PrivateBancorp’s shareholders and receipt of regulatory approvals.
J.P. Morgan Securities and CIBC World Markets served as financial advisors to CIBC in this transaction, while Goldman Sachs was exclusive financial advisor to PrivateBancorp.
In December last year, CIBC agreed to sell its 41% stake in American Century Investments to Japanese investment bank Nomura for $1bn.
Based in Missouri, American Century offers a broad, diversified set of actively managed investment capabilities and solutions to clients across the globe.
Image: CIBC, Commerce Place, Hamilton. Photo courtesy of Nhl4hamilton (Rick Cordeiro)/Wikipedia.