Log in
E-mail
Password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
New member
Sign up for FREE
New customer
Discover our services
Settings
Settings
Dynamic quotes 
OFFON

MarketScreener Homepage  >  Equities  >  Toronto Stock Exchange  >  Canadian Imperial Bank of Commerce    CM   CA1360691010

CANADIAN IMPERIAL BANK OF COMMERCE

(CM)
  Report
SummaryQuotesChartsNewsRatingsCalendarCompanyFinancialsConsensusRevisions 
SummaryMost relevantAll NewsAnalyst Reco.Other languagesPress ReleasesOfficial PublicationsSector newsMarketScreener Strategies

UK's LSE shares surge on historic $2.7 billion U.S. index deal

06/26/2014 | 10:43am EST
Signage is seen on the London Stock Exchange building in central London

LONDON (Reuters) - The London Stock Exchange (>> London Stock Exchange Group Plc) has unveiled the largest purchase in its history, snapping up U.S. indexes group Frank Russell for $2.7 billion (1.59 billion pounds) to move deeper into the world's largest financial services market and sending its shares surging.

LONDON (Reuters) - The London Stock Exchange (>> London Stock Exchange Group Plc) has unveiled the largest purchase in its history, snapping up U.S. indexes group Frank Russell for $2.7 billion (1.59 billion pounds) to move deeper into the world's largest financial services market and sending its shares surging.

Europe's oldest independent bourse, which has fought off a string of takeover approaches in its 213-year history, said on Thursday it would help fund the acquisition with a $1.6 billion rights issue of new stock.

It said the move would boost earnings in the first full year after the deal and would catapult it into third position in the booming market for exchange traded funds (ETFs) - low-cost funds that provide an alternative to active fund management - behind global market leaders S&P Dow Jones and MSCI (>> Msci Inc).

Analysts welcomed a deal that creates a compiler with around $9.2 trillion of assets benchmarked against the performance of its indexes, which include the UK's FTSE 100 <.FTSE> and other high-profile market measures.

Yet some cautioned it still requires regulatory and shareholder approval and saddles the LSE with hefty debt that could affect its credit rating if market conditions worsen. The LSE said it would draw $1.1 billion from existing and new debt facilities to help fund the deal.

"We believe that this transaction will allow LSE to compete more effectively with MSCI ... and will provide more recurring revenue," said analyst Peter Lenardos at RBC Capital Markets, setting a new price target for LSE shares of 22.00 pounds.

"The transaction further diversifies LSE away from capital markets and the UK and towards information services and North America."

The transaction leaves the LSE with net debt of 2.4 times EBITDA, which the group said it aimed to cut to 2 times over the next 12 months, the upper end of its stated preferred range.

LSE shares, which have risen around 15 percent since the start of this year, gained 6 percent at 19.81 pounds by 1345 GMT, outperforming a flat FTSE 100.

LSE Chief Executive Xavier Rolet has been under pressure to secure a transformational deal since an aborted merger attempt with Canada's TMX group in 2011, which left a residue of speculation the operator could itself fall prey to a takeover.

It remains to be seen whether the Russell acquisition fits that bill. Frederic Ponzo, managing partner at consultancy GreySpark Partners, said it adds beef to the business but was not game changing.

MORE DIVERSE

"It makes the LSE marginally harder to take over, but if such a deal happened, the latest addition to the LSE Group would be immediately carved out and sold by the acquirer," Ponzo said.

"However, it makes the (LSE) ... more diversified, so maybe there is value in that. But I am doubtful of the cross-selling opportunities that have been touted with this deal."

One option to further beef up the LSE's assets could be the purchase of Barclays' (>> Barclays PLC) Index, Portfolio and Risk Solutions business, which has been put up for sale and includes a basket of over 98 major indexes.

"They (the LSE) would be an obvious candidate for that business," said one source close to the Russell deal.

The LSE, which said in May it was in talks with Russell's owners Northwestern Mutual on a possible buy, said the enlarged company would yield annual cost savings of $78 million and boost annual revenue by $30 million by year three.

Annual revenue would rise by almost $50 million by year five, it said.

The LSE said it was reviewing the position of Russell's investment management business, which has $256 billion in assets under management. But it declined further comment on options for a business analysts say does not provide an obvious fit.

"We think a sale of the investment management division is likely - it is probable that the complexity of the deal meant they were not able to organise a seller in advance," said Mark Thomas, analyst at Edison Investment Research.

The group wants to launch its first-ever rights issue in September and complete the takeover by the end of the year, after which Russell Chief Executive Len Brennan will join the executive committee.

Northwestern Mutual began exploring the sale of Russell in January after deciding it was no longer a core business. Reuters reported in April Canadian Imperial Bank of Commerce (>> Canadian Imperial Bank of Commerce), MSCI and several private equity firms were considering bids.

Barclays and Greenhill (>> Greenhill & Co., Inc.) acted as financial advisers and joint sponsors on the deal, which was also brokered by Barclays and RBC Capital Markets. Peter J. Solomon and Robey Warshaw also advised on the deal.

(Additional reporting by Kate Holton; Writing by Kirstin Ridley; Editing by Pravin Char and David Holmes)

By Freya Berry and Kirstin Ridley


© Reuters 2014
Stocks mentioned in the article
ChangeLast1st jan.
BARCLAYS PLC 1.69% 139.44 Delayed Quote.-4.94%
CANADIAN IMPERIAL BANK OF COMMERCE -0.10% 110.86 Delayed Quote.2.07%
EURO 50 SELECT 4.75% DECREMENT (SHLE, UHD) 0.11% 655.414667 Real-time Quote.-22.14%
EUROPE SELECT GREEN 50 5% DECREMENT (DIV, UHD) 0.79% 1491.436978 Real-time Quote.-9.25%
GREENHILL & CO., INC. -3.96% 11.89 Delayed Quote.-2.06%
LONDON STOCK EXCHANGE PLC 0.18% 9060 Delayed Quote.0.44%
MSCI UNITED KINGDOM (STRD, UHD) 0.78% 1069.255 Real-time Quote.2.91%
MSCI, INC. 0.28% 404.61 Delayed Quote.-9.39%
NASDAQ -0.82% 141.13 Delayed Quote.6.32%
OMX NORDIC 40 0.09% 2036.705371 Delayed Quote.3.85%
RISE, INC. 0.00% 24 End-of-day quote.0.00%
All news about CANADIAN IMPERIAL BANK OF COMMERCE
01/22CANADIAN IMPERIAL BANK OF COMMERCE : Media Advisory - CIBC's Victor Dodig to Spe..
AQ
01/22CANADIAN IMPERIAL BANK OF COMMERCE : CIBC Asset Management announces CIBC ETF ca..
AQ
01/13CANADIAN IMPERIAL BANK OF COMMERCE : CIBC wins 2021 Business Intelligence Group ..
AQ
01/11Canadian bank CEOs forecast 2021, 2022 strength following challenging year
RE
01/11Bank CEOs say economic rebound is coming, but short term looking 'not as good..
AQ
01/07Spark Power Group Up 5.1% as CIBC Contracts for 15,000 MwH of Renewable Energ..
MT
01/05CANADIAN IMPERIAL BANK OF COMMERCE : Media Advisory - CIBC's Victor Dodig to Spe..
AQ
01/04CANADIAN IMPERIAL BANK OF COMMERCE : Entering a pivotal year for Canadians' pers..
AQ
01/02CANADIAN IMPERIAL BANK OF COMMERCE : CIBC donates $100,000 to Croatia earthquake..
AQ
2020CANADIAN IMPERIAL BANK OF COMMERCE : CIBC Asset Management announces final 2020 ..
AQ
More news
Financials
Sales 2021 19 020 M 14 974 M 14 974 M
Net income 2021 4 591 M 3 614 M 3 614 M
Net Debt 2021 - - -
P/E ratio 2021 10,6x
Yield 2021 5,14%
Capitalization 49 546 M 38 991 M 39 006 M
Capi. / Sales 2021 2,60x
Capi. / Sales 2022 2,52x
Nbr of Employees 43 853
Free-Float 79,5%
Chart CANADIAN IMPERIAL BANK OF COMMERCE
Duration : Period :
Canadian Imperial Bank of Commerce Technical Analysis Chart | CM | CA1360691010 | MarketScreener
Technical analysis trends CANADIAN IMPERIAL BANK OF COMMERCE
Short TermMid-TermLong Term
TrendsBullishBullishBullish
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus OUTPERFORM
Number of Analysts 16
Average target price 120,11 CAD
Last Close Price 110,86 CAD
Spread / Highest target 23,6%
Spread / Average Target 8,34%
Spread / Lowest Target -10,7%
EPS Revisions
Managers and Directors
NameTitle
Victor Dodig President, Chief Executive Officer & Director
John Paul Manley Chairman
Hratch Panossian Chief Financial Officer & Senior Executive VP
Christina Kramer Senior EVP-Technology, Infrastructure & Innovation
Brent Stanley Belzberg Independent Director