Magazine article American Banker

Oppenheimer Deal 'Business as Usual' for CIBC

Magazine article American Banker

Oppenheimer Deal 'Business as Usual' for CIBC

Article excerpt

CIBC Wood Gundy Securities Inc., owned by one of Canada's largest banks, will probably announce plans shortly-possibly today-to buy Oppenheimer & Co.

The deal will reportedly be valued at $525 million, with CIBC Wood Gundy offering $350 million in cash up front and $175 million to be paid out during the next three years to retain key personnel at the New York securities firm.

Officials at both companies declined to comment Monday, but industry analysts in Toronto and New York said such a transaction would not be out of character for CIBC Wood Gundy, a subsidiary of Canadian Imperial Bank of Commerce.

Buying Oppenheimer would be "pretty consistent with what CIBC has indicated they wanted to do," said Canadian banking industry analyst M. Michael Goldberg of HSBC James Capel Canada. "They have been building a pretty substantial investment banking presence in the U.S. over all, and one of the key parts of their picture was equity underwriting."

Other analysts noted that CIBC Wood Gundy's management declared publicly in June that the company was looking to acquire a securities firm. CIBC and Oppenheimer are believed to have been in talks since Oppenheimer's merger negotiations with PNC Bank Corp., Pittsburgh, fell through a month ago.

Banking analysts doubted that a combination of CIBC and Oppenheimer would prompt much reaction, at least among Canadian banks.

"I don't think buying Oppenheimer is going to set the ball in motion" for Canadian banks, emphasized bank bond analyst Eric Grubelich of Keefe Bruyette & Woods Inc. …

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