29 June 2006

CIBC Finalizes Deal on FirstCaribbean

  
The Wall Street Journal, 29 June 2006

Barclays Bank PLC said it entered a definitive agreement with Canadian Imperial Bank of Commerce for the sale of Barclays' 43.7% shareholding in FirstCaribbean International Bank Ltd.

As previously announced, CIBC will pay a price of U$1.62 per FirstCaribbean share, valuing Barclays' stake at about U$1.08 billion. The transaction, which is subject to regulatory approval, is anticipated to close in late 2006.

Barclays said that, under the agreement, CIBC has the option of paying for the transaction in cash, CIBC common shares, or a combination of cash and shares, the relative proportions of which CIBC will determine before completion. Barclays wouldn't intend to be a long-term holder of any CIBC shares it may receive in connection with this transaction.

The group said that promptly after the close of the transaction, CIBC will be required to make a mandatory offer to all shareholders in FirstCaribbean. The mandatory offer will also be at a price of U$1.62 per share. Both CIBC and FirstCaribbean have reiterated their commitment to maintaining a strong minority ownership that they expect to grow in the future.

The parties have agreed to structure the transaction in two stages, with Barclays selling 90% of its holding initially and then CIBC potentially acquiring, at Barclays option, the balance through the subsequent mandatory tender offer. The consideration represents a multiple of 17.5x FirstCaribbean's operating earnings for the year ended Oct. 31, 2005 and a multiple of 3.0x FirstCaribbean's tangible book value. Assuming a sale of 100% of Barclays stake in FirstCaribbean, the post-tax gain to Barclays on the sale is about £250 million (U$455.1 million).

CIBC will also pay an additional sum to Barclays, as well as the other shareholders who tender their shares to this offer, to reflect dividends in respect of their period of ownership prior to closing.

Group Finance Director, Naguib Kheraj, said: "This transaction leaves FirstCaribbean well positioned for its future development. While the combination of Barclays and CIBC's Caribbean retail-banking assets created value for all stakeholders, the future strategy of FirstCaribbean is now best pursued with one controlling shareholder."
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