Jun 2006 Financial News

Barclays and CIBC Finalize Deal

Jun 30, 2006

Currency Conversion: BDS$1: TT$3.17

As reported by Nation News (Barbados) on June 30, 2006, Barclays Bank Plc agreed to sell its 43.7% ownership stake in First Caribbean International Bank (FCIB) to Canadian Imperial Bank of Commerce (CIBC). The total consideration for the deal is approximately BDS$2.16 billion (TT$6.85 billion) or BDS$3.24 (TT$10.28) for each FCIB share. Upon completion of the transaction, CIBC will hold a majority stake of 87.4% in FCIB.

In keeping with regional laws covering take-over bids, CIBC will have to offer to buy the shares of all FCIB shareholders at the same price of $3.24 (TT$10.28) per share.

As reported by Nation News, the structure of the transaction is such that, Barclays will sell 90% of its holding initially and CIBC potentially acquiring, at Barclay’s option, the balance in its subsequent mandatory tender offer. CIBC will then pay an additional sum to Barclays, as well as other shareholders who tender their shares to this offer, to reflect dividends in respect of their period of ownership prior to closing.

On the regular market of the Barbados Stock Exchange, shares of FCIB stood at BDS$4.00 (TT$12.69) each at the close of trading on June 28, 2006. Hence, the offer would be at a discount to the current market price.

We believe, with only one major shareholder, FCIB would be better able to increase shareholder value.

The transaction is expected to close by the end of the year.

Source: Nation News (Barbados)

Gia Singh
WISE Research Team