TORONTO, Nov. 4 /PRNewswire-FirstCall/ -- CIBC (CM: TSX; NYSE) today announced that it has agreed to sell to Oppenheimer Holdings Inc. (OPY: NYSE) its U.S. domestic investment banking, equities, leveraged finance and related debt capital markets businesses. The transaction also includes CIBC's Israeli investment banking and equities business, and certain parts of other U.S. capital markets-related businesses located in the UK and Asia.
CIBC will retain its other U.S. wholesale businesses, which include real estate finance, equity and commodity structured products, merchant banking and oil and gas advisory, as well as the balance of its U.S. debt capital markets, Asia and U.K businesses.
CIBC will also maintain its corporate lending capability and its ability to distribute Canadian equities and fixed income products in the U.S. and international markets on behalf of its Canadian clients.
Under the terms of the agreement, CIBC will receive a deferred payment on the fifth anniversary of closing based on the performance of Oppenheimer's combined capital markets business over that five-year period. CIBC will also receive warrants exercisable for one million Oppenheimer shares at the end of the five year period.
As part of the transaction, Oppenheimer will borrow $100 million from CIBC in the form of a subordinated loan. In addition, CIBC will provide a warehouse facility, initially up to $1.5 billion, to a newly formed Oppenheimer U.S. entity to finance and hold the syndicated loans for U.S. middle market companies. Underwriting of loans pursuant to the warehouse facility will be subject to joint credit approval by Oppenheimer and CIBC.
"This transaction gives CIBC the opportunity to benefit from Oppenheimer's future success," said Gerry McCaughey, CIBC's President and Chief Executive Officer. "It will also permit CIBC to redeploy capital over time to further support the continued growth of our strong and profitable U.S. and international operations, as well as our core Canadian businesses. This is in line with our strategic imperative to achieve consistent and sustainable performance over the long-term."
Albert Lowenthal, Oppenheimer's CEO, said: "We are pleased to once again be partnering with CIBC and believe that the combination of these resources will significantly increase Oppenheimer's penetration in capital markets. The firm is now positioned to service clients with a complete offering of capital markets services, including M&A advisory, equity underwriting, high-yield fixed income origination and loan syndication. The timing of this acquisition will permit us to gain market penetration at a time that other firms are pulling back. We look forward to working with our associates both new and old in making this a success."
For the U.S. businesses, the proposed transaction is expected to close in January 2008, subject to regulatory approvals. A second closing is anticipated for the overseas operations, including the Israeli broker-dealer. CIBC does not expect the proposed transaction to have a material impact on its earnings per share or Tier 1 capital ratio, either at closing or on an ongoing basis.
CIBC World Markets is the wholesale and corporate banking arm of CIBC, providing a range of integrated credit and capital markets products, investment banking, and merchant banking to clients in key financial markets in North America and around the world. We provide innovative capital solutions and advisory expertise across a wide range of industries as well as top-ranked research for our corporate, government and institutional clients.
Oppenheimer Holdings, through its principal subsidiaries, Oppenheimer & Co. Inc. (a U.S. broker-dealer) and Oppenheimer Asset Management Inc., offers a full range of services from 81 offices in 21 states and through local broker-dealers in 2 foreign jurisdictions. The Company offers trust and estate services through Oppenheimer Trust Company. Evanston Financial Corporation is engaged in mortgage brokerage and servicing. In addition, through its subsidiary, Freedom Investments, Inc. and the BUYandHOLD division of Freedom, the Company offers online discount brokerage and dollar-based investing services.
CIBC will hold an analyst/investor/media call to discuss this announcement on November 5 at 2 p.m. (EST). A live audiocast will be available in English and French at http://www.cibc.com/, About CIBC. Participants can also listen to the conference call in English (416-641-6139 in Toronto, or toll-free 1-866-299-6657 throughout the rest of North America) and French (514-861-4190 or toll-free 1-877-580-3850 throughout the rest of North America). A slide presentation will be available at http://www.cibc.com/, About CIBC, prior to the call. A telephone replay will be available in English (416-695-5800 or 1-800-408-3053, passcode 3240586 followed by the number sign) and French (514-861-2272 or 1-800-408-3053, passcode 3241047 followed by the number sign) until midnight (EST) on Monday, November 19, 2007.
This news release contains forward-looking statements. These forward-looking statements include, but are not limited to, statements about the proposed acquisition by Oppenheimer Holdings Inc. of CIBC's domestic U.S. investment banking, equity capital markets, leveraged finance, research and related businesses, as well as operations, financial condition, strategies and outlook of CIBC. A forward-looking statement is subject to inherent risks and uncertainties that may be general or specific. A variety of factors, many of which are beyond CIBC's control could cause actual results to differ materially from the expectations expressed in CIBC's forward-looking statements including the possibility that the proposed transaction does not close when expected or at all and that CIBC and Oppenheimer Holdings may be required to modify aspects of the proposed transaction to achieve regulatory approval. Readers should not place undue reliance on CIBC's forward-looking statements. CIBC does not undertake to update any forward-looking statement that is contained in this news release.
