TORONTO PrivateBancorp (PVTB.O) on Wednesday postponed a shareholder vote due Thursday on a proposed takeover by Canadian Imperial Bank of Commerce (CM.TO), raising doubts about whether the deal will proceed.
CIBC, Canada's fifth biggest lender, said in June it planned to buy Chicago-based PrivateBancorp in a $3.8 billion cash-and-share deal, its biggest ever acquisition. Major Canadian banks are looking for growth in the United States to offset sluggish activity in their domestic market.
However, some PrivateBancorp shareholders have argued in recent weeks the prospect of higher interest rates, revised banking regulation and a lower corporate tax rate in the United States following Donald Trump's victory in the Nov. 8 presidential election means the bank may be worth more.
"In view of the significant changes to trading market conditions over the past few weeks, we believe it is in the best interests of all of PrivateBancorp's stockholders to have additional time to consider the value and long-term strategic benefits of this transaction," PrivateBancorp said.
Sources familiar with the matter said PrivateBancorp delayed the vote because it anticipated shareholders rejecting the deal. PrivateBancorp and CIBC mutually agreed the postponement was prudent in the circumstances, they said.
Barclays analyst John Aiken said the postponed vote increased the likelihood CIBC will be forced to raise its offer.
"In our opinion, CIBC's management will struggle between its desire to pursue its U.S. ambitions through this vehicle and maintaining the relative prudence of its original offer," Aiken said. "While we do not anticipate a sweetened bid from CIBC, we do admit that the likelihood is far from remote."
Proxy advisory firms Glass Lewis and Egan-Jones on Thursday recommended PrivateBancorp's shareholders vote in favor of the sale to CIBC, but ISS, another proxy firm, recommended PrivateBancorp shareholders vote against it.
Last week, Alpine Associates Management, PrivateBancorp's 14th biggest shareholder, said it intended to vote against the deal, saying the outlook for regional banks in the United States had dramatically improved since the U.S. election.
PrivateBancorp said it remained committed to the transaction and to working with CIBC to obtain the necessary regulatory and shareholder approvals. It said it expected to set a new date for the shareholder vote in the first quarter of 2017.
Shares in CIBC were up 0.3 percent in early trading with PrivateBancorp down 0.2 percent.
CIBC said it still wanted to complete the deal on the agreed terms.
(Reporting by Matt Scuffham; Editing by Frances Kerry, Paul Simao and Meredith Mazzilli)