TORONTO (Reuters) - Canadian Imperial Bank of Commerce (CM.TO) said it will buy Atlantic Trust Private Wealth Management from money manager Invesco Ltd (IVZ.N) for $210 million to bulk up its U.S. money management business.
The all-cash deal announced on Thursday will add about $20 billion in assets and would be accretive to earnings in fiscal 2014, Canada’s No. 5 bank said.
CIBC is the most domestically focused of Canada’s top five banks. Its one area of international expansion in recent years has been U.S. wealth management, particularly with its C$848 million 2011 acquisition of 41 percent of American Century Investments.
The bank said in a statement Atlantic Trust will give it exposure to the high-net-worth U.S. private wealth market, where assets are growing 50 percent faster than those of the average U.S. household.
The deal is expected to close in the second half of 2013.
Barclays Capital analyst John Aiken said in a note the move with in line with CIBC’s strategy, but he wondered whether it might raise concern that the bank was planning to re-enter the broader U.S. brokerage business.
CIBC was stung by exposure to both the 2000 tech bubble and 2008 housing crisis, which prompted the bank to de-risk and focus on retail banking and wealth management.
“Given the fact that CIBC has retrenched in Canada for the bulk of its remaining business segments, we would much prefer a strategy that returns capital to shareholders than expansion into the U.S. via segments that have limited synergies,” Aiken said.
CIBC shares fell 49 Canadian cents to C$78.35 on the Toronto Stock Exchange ahead of the after-markets release of the news. Invesco rose 30 cents to $30.18 in New York.
Reporting by Cameron French in Toronto, additional reporting by Ankur Banerjee in Bangalore; Editing by Leslie Gevirtz