UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
NOTICE OF EXEMPT SOLICITATION
Submitted Pursuant to Rule 14a-6(g)
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1.
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Name of Registrant:
PrivateBancorp, Inc.
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2.
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Name of person relying on exemption:
Glazer Capital, LLC
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3.
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Address of person relying on exemption:
250 West 55th Street
Suite 30A
New York, NY 10019
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4.
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Written materials:
Attached hereto is a copy of a press release,
dated December 1, 2016. This material is being submitted pursuant to Rule 14a-6(g)(1) of the Securities Exchange Act
of 1934.
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Glazer Capital, LLC Issues Open Letter
to Shareholders of PrivateBancorp, Inc.
Believes the CIBC Merger Consideration
Clearly Undervalues the Company in Light of the Recent Surge in Regional Bank Valuations
Explains That the Only Way for Shareholders
to Preserve Their Ability to Receive Full and Fair Value for Their Investment Is By Rejecting the Proposed Merger with CIBC at
the Upcoming Special Meeting Next Week
Urges Shareholders to Deny CIBC the
Ability to Reap the Windfall Precipitated by Recent Bank-Favorable Market Developments
Gratified That ISS Recognizes That
the Proposed Merger Undervalues PrivateBancorp and Recommends Shareholders Vote Against the Acquisition
NEW YORK, Dec. 1, 2016 /PRNewswire/ -- Glazer
Capital, LLC, the manager of investment funds that collectively beneficially own 1,000,000 shares of PrivateBancorp, Inc. (NASDAQ:
PVTB) (“PrivateBancorp”) common stock, issued an open letter today to PrivateBancorp shareholders detailing reasons
for rejecting the proposed acquisition of PrivateBancorp by CIBC (the “CIBC Merger”) at the special meeting of PrivateBancorp
shareholders scheduled to be held on December 8, 2016 (the “Special Meeting”).
The letter demonstrates, among other things,
that (i) the CIBC Merger would prevent shareholders from realizing the benefits of the recent surge in regional bank valuations,
(ii) PrivateBancorp’s Board of Directors has no choice under the terms of its merger agreement with CIBC but to present the
CIBC Merger for a vote by shareholders at the upcoming Special Meeting, (iii) rejection of the CIBC Merger at the upcoming Special
Meeting would not jeopardize the CIBC Merger and is the best means available for shareholders to achieve full and fair value, (iv)
using traditional comparative valuation methodologies similar to those employed by Goldman Sachs and Sandler O’Neill in their
respective fairness opinions, we believe that PrivateBancorp’s share price would exceed $50 per share absent the merger agreement
with CIBC, (v) we believe that Goldman Sachs and Sandler O’Neill would not be able to re-render their fairness opinions based
on current valuations, and (vi) we applaud ISS for its pragmatic, pro-shareholder approach.
The full text of the letter follows below:
December 1, 2016
Dear Fellow PrivateBancorp Shareholders,
On June 29, 2016, Canadian Imperial Bank
of Commerce ("CIBC") announced
1
an agreement to acquire PrivateBancorp, Inc. (“PrivateBancorp” or the “Company”) for cash and stock consideration
(the “CIBC Merger”) then valued at $47.00 per share, a 31% premium to PrivateBancorp’s prior closing price of
$35.93 (the “Unaffected Price”) on June 28, 2016. Since then, we have witnessed a seismic shift in the valuation of
regional banks, rendering inadequate the merger consideration and obsolete the fairness opinions provided by Goldman Sachs (“Goldman”)
and Sandler O’Neill (“Sandler”). Glazer Capital, LLC (“Glazer Capital”) is the beneficial owner
of 1,000,000 shares of PrivateBancorp, and our sole interest is to ensure that all shareholders receive full and fair value for
their investment in the Company.
We join Institutional Shareholder Services
("ISS") in calling on shareholders to reject the CIBC Merger, as presently structured, at the special meeting of PrivateBancorp
shareholders scheduled to be held on December 8, 2016 (the “Special Meeting”). As we demonstrate herein, shareholders
have very little to lose by rejecting the CIBC Merger, but a lot to gain.
PrivateBancorp’s shareholders are being
asked to approve a transaction on December 8, 2016 that offers what is now at best a negligible premium, and more likely a discount,
to PrivateBancorp’s standalone fair value. It is important to understand that the merger agreement signed by PrivateBancorp
and CIBC contractually compels the Board of Directors of PrivateBancorp (the “Board”) to maintain its recommendation
in favor of the CIBC Merger and to present the merger to shareholder for approval at the upcoming Special Meeting, forcing PrivateBancorp
shareholders to take matters into their own hands by voting against the CIBC Merger. It is equally important to understand that
a rejection of the CIBC Merger on December 8
th
would not cause the termination of the Merger Agreement, as PrivateBancorp
would be contractually obligated to adjourn or postpone the Special Meeting up to two times in the event that shareholders fail
to approve the CIBC Merger. What this would do, however, is unequivocally demonstrate to the boards of both PrivateBancorp and
CIBC that PrivateBancorp’s shareholders demand an adequate premium to standalone value in order to approve a merger proposal,
and that they refuse to allow CIBC to reap the windfall resulting from the recent significant increase in bank valuations.
We hope that it is as clear to you as it is
to us and to ISS that voting against the CIBC Merger is a low risk method of pursuing the maximum value that we shareholders deserve
for our investment in the shares of PrivateBancorp.
Share Price Performance of Comparable Companies
It is clear from the share prices of regional
banks that market participants expect them to prosper under the Trump administration, based on, we believe, the likelihood of
less restrictive regulation of regional banks, lower corporate taxes and higher interest rates. Since June 28, 2016, the day preceding
the announcement of the agreement with CIBC, shares of the 18 comparable companies (“peers”) selected by Goldman in
its fairness opinion (page 52 of the proxy statement
2
)
and shares of the 20 peers selected by Sandler in its fairness opinion (page 65 of the proxy statement
2
) have, on average,
appreciated in excess of 40% (Table 1). Shareholders of PrivateBancorp, however, are being offered merger consideration worth
only 32% more than PrivateBancorp’s Unaffected Price. If PrivateBancorp’s shareholders approve the CIBC Merger at
the Special Meeting, they will forfeit the opportunity to reap the benefit of the recent seismic shift in the value ascribed to
asset sensitive regional banks. The proposed CIBC Merger is more aptly a
takeunder
, not a
takeover
.
Table1:
Percentage Change From June 28, 2016 Through November 30, 2016
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Goldman Sachs peers (average)
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43%
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Sandler O'Neill peers (average)
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40%
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iShares US Regional Banks ETF (ticker: IAT)
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39%
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S&P Regional Bank Select Industry Index
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43%
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PrivateBancorp (merger consideration value)
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32%
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Valuation of Comparable Companies
T
he tables
on pages 51-53 and 64-67 of the proxy statement
2
present valuation metrics from Goldman’s and Sandler’s
fairness opinions (Table 2). Specifically, the tables illustrate that, at the time that the fairness opinions were rendered by
Goldman and Sandler, the $47.00 merger consideration represented Price to Earnings Per Share (“EPS”), Price to Stated
Book Value (“SBV”) and Price to Tangible Book Value (“TBV”) ratios well in excess of PrivateBancorp’s
peers.
Table 2: Fairness Opinion Valuation Metrics
PrivateBancorp ($47.00, initial merger consideration value)
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17.1x 2017E EPS
2.1x SBV
2.2x TBV
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Median of Goldman’s 18 peers (as of 6/24/16)
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12.8x 2017E EPS
1.2x SBV
1.8x TBV
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Median of Sandler’s 20 peers (as of 6/24/16)
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12.4x 2017E EPS
1.1x SBV
1.6x TBV
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However, if one were to recalculate those
same valuation metrics today and compare PrivateBancorp to its peers using current market valuations, one can reasonably conclude
that the merger consideration no longer values PrivateBancorp’s sharers at much of a premium. Furthermore,
prior
to
the announcement of the CIBC Merger, PrivateBancorp’s shares already traded at a premium to many of its peers (Table 3).
We therefore believe it reasonable to conclude that PrivateBancorp’s shares are trading today at a price
below
that
at which they would trade absent the merger agreement with CIBC.
Table 3: PrivateBancorp Premium vs Peers
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2017E P/E
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Price / SBV
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Price / TBV
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As
Presented in the Proxy Statement (as of 6/24/16)
2
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PrivateBancorp ($37.34, close on 6/24/16)
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13.6x
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1.7x
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1.8x
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PrivateBancorp ($47.00, initial merger consideration value)
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17.1x
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2.1x
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2.2x
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Goldman peers (median)
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12.8x
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1.2x
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1.8x
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PrivateBancorp initial premium vs peers
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4.3x
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0.9x
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0.4x
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Sandler peers (median)
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12.4x
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1.1x
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1.6x
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PrivateBancorp initial premium vs peers
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4.7x
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1.0x
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0.6x
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Recalculated as of 11/30/2016
(source: Bloomberg)
3
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PrivateBancorp ($47.57, updated consideration value)
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17.1x
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2.0x
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2.1x
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Goldman peers (median)
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17.2x
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1.7x
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2.2x
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PrivateBancorp updated premium vs peers
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- 0.1x
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0.3x
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- 0.1x
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Sandler peers (median)
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17.2x
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1.4x
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2.0x
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PrivateBancorp updated premium vs peers
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- 0.1x
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0.6x
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0.1x
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Private Bancorp’s Share Price Has Been Anchored Due to
the Proposed Merger
We believe that PrivateBancorp’s shares
have underperformed the averages of two diversified groups of companies deemed comparable to it by Goldman Sachs and Sandler O’Neill
because:
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·
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40% of the merger consideration is a fixed amount of cash, and
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60% is in the form of CIBC shares, which have appreciated only 2% since June 28, 2016.
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Financial media and Wall Street analysts appear
to attribute the recent material share price appreciation of US mid-tier banks to the fact that the interest rate and regulatory
environments under a Trump administration are expected to be favorable to smaller banks. It is hard to conceive of a reason that,
absent the CIBC Merger, the shares of PrivateBancorp, a premier Chicago based, asset sensitive bank with a C&I loan book primed
to benefit from rising short term interest rates, would not have appreciated at least commensurately with the 40% average share
price appreciation achieved by its peers. Had PrivateBancorp’s shares increased by 40% since June 28, 2016, its share price
would be $50.30 before any takeover premium.
For the aforesaid reasons, we believe that
the CIBC Merger woefully shortchanges PrivateBancorp shareholders. We applaud ISS for rejecting a ‘rubber-stamp’ approach
and we challenge Glass Lewis and Egan Jones to reassess the CIBC Merger through the same pragmatic lens. We urge you to preserve
your ability to receive full and fair value for your investment in PrivateBancorp by voting against the CIBC Merger at the upcoming
Special Meeting. Do not leave money on the table. Send a message to the boards of PrivateBancorp and CIBC that you believe the
merger consideration offered by CIBC to be woefully inadequate.
Sincerely,
Paul J. Glazer
President and Chief Investment Officer
Glazer Capital, LLC
Mark Ort
Portfolio Manager
Glazer Capital, LLC
FORWARD-LOOKING STATEMENTS
Certain statements contained in this letter, and the documents
referred to in this letter, are “forward-looking statements” and are prospective. These statements may be identified
by their use of forward-looking terminology such as the words “expects”, “projects”, “believes”,
“anticipates”, “intends” or other similar words. Forward-looking statements are not based on historical
facts, but rather on current expectations and projections about future events, and are therefore subject to risks and uncertainties
which could cause actual results to differ materially from the future results expressed or implied by the forward-looking statements.
These statements are subject to inherent risks and uncertainties surrounding future expectations. Important factors that could
cause actual results to differ materially from the expectations set forth in this letter include, among other things, the factors
identified under the section entitled “Risk Factors” of PrivateBancorp's special meeting proxy statement and other
risk factors contained in PrivateBancorp's Annual Report on Form 10-K for the year ended December 31, 2015. Such forward-looking
statements should therefore be construed in light of such factors, and Glazer Capital is under no obligation and expressly disclaims
any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future
events or otherwise, except as required by law.
About Glazer Capital, LLC
Glazer Capital LLC, a Registered Investment Adviser with the U.S.
Securities and Exchange Commission, is a New York City based investment management firm founded by Paul J. Glazer in 1999. We aim
to achieve stable and superior performance in all market environments through our disciplined investment approach and research
driven methodology.
Contact
: David A. Barlow, 212-808-7304
1
CIBC Press Release, June 29, 2016, https://www.sec.gov/Archives/edgar/data/889936/000089882216000377/pressrelease.htm
2
Joint PrivateBancorp / CIBC Proxy Statement / Prospectus, October 31, 2016, https://www.sec.gov/Archives/edgar/data/1045520/000104746916016410/a2230158z424b3.htm
3
Recalculations performed using data and median estimates from the Bloomberg Professional service
PLEASE NOTE: This is not
a solicitation of authority to vote your proxy. Glazer Capital, LLC is not asking for your proxy card and cannot accept your proxy
card. Please DO NOT send us your proxy card.
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