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TORONTO (Reuters) - Canadian Imperial Bank of Commerce (CM.TO) said on Thursday it would be "disciplined" in assessing whether to raise its C$3.8 billion ($2.9 billion) offer for Chicago-based PrivateBancorp and could buy back shares if the deal collapses.
The bank announced what would be its biggest acquisition in June last year, but the plan has been in doubt since PrivateBancorp postponed a shareholder vote to approve it in December after some investors said they would reject the offer.
CIBC is weighing its options ahead of a deadline in June and could decide to raise its offer or walk away.
Speaking after the bank posted better-than-expected quarterly results, CIBC Chief Executive Victor Dodig said he believed the deal was still in the best interest of CIBC and PrivateBancorp shareholders.
"They're a good bank," he said. "We've been working with them for a long, long time, we've got good integration plans under way, but we will be disciplined and we will be patient when it comes to price."
He added: "We may have to be more active in terms of buying back stock over time if we're not able to consummate that deal."
Since Donald Trump's victory in the Nov. 8 U.S. presidential election, some PrivateBancorp shareholders had argued that the prospect of higher interest rates, lighter banking regulation and a lower corporate tax rate in the United States meant the business was worth more than when the offer was first made.
Banking sources say CIBC executives don't want to be seen to be overpaying for PrivateBancorp at a time when valuations for U.S. regional banks are soaring but are also reluctant to walk away from a deal they had been working on for months.
Shares in PrivateBancorp have risen by nearly 30 percent since the beginning of November and close to 60 percent since the day before CIBC made its offer on June 29.
On Thursday, PrivateBancorp shares were down 2.1 percent, and CIBC shares were up 0.8 percent in midday trade.
"I think they (CIBC) are just standing their ground, so kudos for them for having a valuation in mind that they are willing to pay," said Barry Schwartz, portfolio manager at Baskin Financial Services, who holds some CIBC shares.
"There are 8,000 regional banks in the U.S.; there are a lot of other fish in the sea and other opportunities if it doesn't work out for them," he added.
Chief Financial Officer Kevin Glass told Reuters in an interview that although CIBC could pursue alternative options in the United States, the bank remained keen on PrivateBancorp.
"I think there are always other deals but we’ve spent a lot of time with PrivateBanc," he said. "We think it would be a very good fit and so we’ll stay focused on that in the short term."
Manash Goswami, portfolio manager at First Asset Investment Management, another shareholder, said he believed CIBC was keen to make the PrivateBancorp deal work.
"We're still under the assumption that they will pursue it," he said.
($1 = 1.3155 Canadian dollars)
Reporting by Matt Scuffham and Fergal Smith, editing by Jane Merriman, Jason Neely and W Simon