PrivateBancorp Delays Shareholder Vote On Merger Offer

The current market scenario has led PrivateBancorp, Inc.’s (NASDAQ:PVTB) shares to rise over the last few weeks. As a result, the Chicago-based bank has postponed a meeting, scheduled to be held on Dec 8, 2016, to take shareholders’ votes regarding the takeover by Canadian Imperial Bank of Commerce (TO:CM) .

On Jun 29, Canadian Imperial entered into an agreement to acquire PrivateBancorp for a total value of $3.8 billion or $47 per Private Bancorp’s shares. Per the terms of the transaction, it would pay $18.80 in cash and 0.3657 of its share for each PrivateBancorp share.

Canadian Imperial had planned to acquire PrivateBancorp to expand its business in the U.S to offset sluggish activity in its domestic market.

However, post the announcement of the deal, shares of PrivateBancorp increased over 45% so far, outpacing the 40.3% growth of the Zacks categorized Midwest Banks industry. Notably, the company’s shares increased approximately 15.8% post the U.S. Presidential election.



Moreover, after Donald Trump became the President, financial companies have started expecting that some of the regulatory burden will be eased and there will be better support from the rate environment.

Therefore, based on such assumptions, various shareholders of PrivateBancorp are now contemplating whether the deal will be fruitful for their company or not. Hence, they want more time to think about the same, before casting their vote.

In fact, if the expectations from the new president turn into reality, it might positively impact PrivateBancorp’s financials. And it would be more beneficial for the company to continue operating as an independent lender, rather than merging with any other company.

Moreover, the original deal price of $47 look unfavorable now, as the shares of the company closed at $52.39 on Dec 7.

James Guyette, chairman of PrivateBancorp said, “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.”

Canadian Imperial CEO, Victor Dodig however said, “We continue to believe the cash and stock consideration in this transaction provides significant immediate and long-term value to PrivateBancorp shareholders.”

Sources familiar with the matter said that both the companies have mutually agreed for the delay. Moreover, a new shareholder meeting is expected to take place in the first quarter of 2017.

Currently, PrivateBancorp carries a Zacks Rank #4 (Sell).

A couple of better-ranked stocks in the same space include Enterprise Financial Services Corp (NASDAQ:EFSC) and First Financial Bancorp. (NASDAQ:FFBC) .

Enterprise Financial has witnessed an upward earnings estimate revision of 2.6% for the current year over the last 60 days and its share price is up 40.9% year to date. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

First Financial carries a Zacks Rank #2 (Buy) and has witnessed an upward earnings estimate revision of 1.4% for the current year over the last 60 days. Moreover, its share price is up approximately 55% year to date.

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