• Canada’s No. 5 bank adds business clients in Chicago area
  • Cash and stock deal provides 31% premium for U.S. bank holders

Canadian Imperial Bank of Commerce agreed to buy PrivateBancorp Inc. for $3.8 billion to gain a U.S. commercial banking platform in the biggest transaction ever for Canada’s fifth-largest lender.

CIBC will pay $18.80 in cash and 0.3657 of a common share for each PrivateBancorp share, the Toronto-based company said in a statement Wednesday. The offer is worth about $47 a share for PrivateBancorp shareholders, a 31 percent premium based on the Tuesday closing prices of each bank.

Chief Executive Officer Victor Dodig indicated in April that CIBC was seeking a U.S. acquisition following the sale of its stake in American Century Investments. PrivateBancorp, a Chicago-based commercial bank, has $17.7 billion in assets, with private-banking and wealth-management capabilities. CIBC joins Canadian rivals Royal Bank of Canada and Toronto-Dominion Bank, which are expanding in the U.S. as lending growth in Canada slows.

The deal will allow CIBC to offer Canadian customers U.S. banking services, to accept deposits, and to provide commercial and private-banking services to the clients of Atlantic Trust, a U.S. wealth-management firm it bought about two years ago, CIBC said.

The Canadian bank said it expects the transaction to close in the first quarter of 2017 and start contributing to earnings in its third year. It expects to pay PrivateBancorp stockholders about $1.5 billion in cash and issue about 29.5 million shares, which represents a mix of about 60 percent stock and 40 percent cash.

JPMorgan Chase & Co. and CIBC World Markets Inc. served as financial advisers to CIBC. Goldman Sachs Group Inc. served as exclusive financial adviser to PrivateBancorp.

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