Bank to Retain 24.9% Minority Stake Under the Terms of the
Agreement
TORONTO, Nov. 8, 2019 /CNW/ - CIBC (TSX: CM) (NYSE: CM)
announced today that it has reached an agreement to sell a
significant portion of its majority stake in CIBC FirstCaribbean
("FirstCaribbean") to GNB Financial Group Limited ("GNB"). Under
the terms of the agreement, GNB is acquiring 66.73% of
FirstCaribbean shares from CIBC for total consideration of
US$797 million, which represents a
company valuation of approximately US$1,195
million, subject to closing adjustments to reflect certain
changes in FirstCaribbean's book value prior to closing.
"We continue to build a relationship-oriented bank for a modern
world, and this strategic transaction will sharpen our focus on our
core businesses," said Shawn Beber,
Senior Executive Vice-President, General Counsel and Corporate
Development, CIBC. "FirstCaribbean is a well-performing business
and we believe this transaction will support its long-term growth
prospects while creating value for its stakeholders as well as
those of CIBC. As an investor in FirstCaribbean, we intend to work
closely with GNB Financial Group to support continued growth for
the business."
"FirstCaribbean will remain the strong entity it is today,
committed to servicing its clients in the region," said
Jaime Gilinski, Chairman of GNB
Financial Group Limited. "I have been impressed by the strength and
stability of FirstCaribbean and am excited about its prospects for
the future."
GNB is wholly owned by Starmites Corporation S.ar.L, the
financial holding company of the Gilinski Group. The Gilinski Group
has banking operations in Colombia, Peru, Paraguay, Panama, and Cayman
Islands with approximately US$15
billion in combined assets.
The total consideration is comprised of approximately
US$200 million in cash and secured
financing provided by CIBC for the remainder. Following the close
of the transaction, CIBC will remain a 24.9% minority shareholder
of FirstCaribbean and will benefit from various minority
shareholder protections, as well as liquidity rights in respect of
its minority stake.
CIBC's Common Equity Tier 1 capital ratio is expected to improve
by over 40 bps on closing. The transaction is expected to result in
an after-tax loss of approximately C$135 million that will be
recognized in the fourth quarter of 2019, representing a reduction
of the carrying value of goodwill related to FirstCaribbean. Upon
closing, CIBC will realize accumulated foreign currency translation
gains relating to FirstCaribbean, estimated to be approximately
C$280 million based on exchange rates
as of October 31, 2019, and will also
recognize the impact of any closing adjustments and its minority
stake.
The agreement is expected to be completed in 2020, subject to
satisfaction of customary closing conditions, including receipt of
regulatory approvals, and both CIBC and GNB are working closely to
ensure a smooth transition for clients and team
members.
A NOTE ABOUT FORWARD-LOOKING STATEMENTS: From time to time, we
make written or oral forward-looking statements within the meaning
of certain securities laws, including in this press release report,
in other filings with Canadian securities regulators or the U.S.
Securities and Exchange Commission and in other communications.
These statements include, but are not limited to, statements about
our potential normal course issuer bid purchases and about our
financial condition, priorities, targets, ongoing objectives,
strategies and outlook. Forward-looking statements are subject to
inherent risks and uncertainties that may be general or specific. A
variety of factors, many of which are beyond our control, could
cause actual results to differ materially from the expectations
expressed in any of our forward-looking statements, including
general business and economic conditions worldwide; amendments to,
and interpretations of, risk-based capital guidelines; and changes
in monetary and economic policy. We do not undertake to
update any forward-looking statement except as required by law.
About CIBC
CIBC is a leading Canadian-based global financial institution
with 10 million personal banking, business, public sector and
institutional clients. Across Personal and Small Business Banking,
Commercial Banking and Wealth Management, and Capital Markets
businesses, CIBC offers a full range of advice, solutions and
services through its leading digital banking network, and locations
across Canada, in the United States and around the
world. Ongoing news releases and more information about
CIBC can be found
at www.cibc.com/en/about-cibc/media-centre.html.
SOURCE CIBC