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CIBC (CM) Closes Acquisition of Geneva Advisors for $200M

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CIBC (CM - Free Report) recently announced the completion of the buyout of Geneva Advisors, a Chicago-based private wealth management firm. The transaction is expected to be accretive to CIBC’s earnings in fiscal 2019.

Details of the Deal

Per the terms disclosed in July 2017, the deal is valued at $200 million. Of the total value, $135 million was paid at closing, with 25% paid in cash and 75% paid in the form of CIBC common shares. The remaining is contingent on future performance conditions being met.

Geneva Advisors brought with it about $8.6 billion in assets under management and almost 100 employees to CIBC Atlantic Trust Private Wealth Management. They would report to Jack S. Markwalter Jr., Chairman and CEO of CIBC Atlantic Trust.

On completion of the transaction, Larry D. Richman, CIBC Group Head, U.S. Region, and President & CEO, The PrivateBank. said "The combined strengths of our teams, shared client-first approach and high-touch service will further strengthen and position us to grow our private wealth management business in the U.S. and, in particular, our Chicago market.”

Inorganic Expansion Drives Growth

Previously, CIBC had completed the acquisition of The PrivateBank for about $5 billion in June 2017. The deal is expected to be accretive to CIBC’s earnings per share within three years. The company had paid $2.4 billion in cash and roughly 32.3 million of its shares.

Both the acquisitions shall support CIBC’s growth plan in the United States. They helped expand CIBC's private wealth management client base and investment management capabilities. Further, as a result of these successful acquisitions, CIBC now has about $50 billion in assets under administration.

Shares of CIBC have gained 3.7% year to date, underperforming the 15.7% rally of the industry.

Zacks Rank & Key Picks

Currently, CIBC sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Some other stocks worth considering in the same space are Deutsche Bank (DB - Free Report) , HDFC Bank Limited (HDB - Free Report) and Mitsubishi UFJ Financial Group, Inc. . All these stocks carry a Zacks Rank #2 (Buy).

Deutsche Bank’s Zacks Consensus Estimate for current-year earnings was revised 9.8% upward for 2017, in the past 60 days. Also, its share price has increased 11.1% in the past 12 months.

HDFC Bank’s current-year earnings estimates were revised nearly 3% upward, over the past 60 days. Further, the company’s shares have jumped 31.6% in a year.

Mitsubishi UFJ’s Zacks Consensus Estimate for current-year earnings was revised 3.2% upward, over the last 60 days. Moreover, in the past year, its shares have gained 11.8%.

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