TORONTO and NEW YORK, Nov. 4 /CNW/ - Oppenheimer Holdings Inc. (OPY:
NYSE) today announced that it has agreed to buy a major part of CIBC World
Markets' U.S. capital markets businesses.
The businesses to be acquired by Oppenheimer employ over 700 people and
include CIBC World Markets' U.S. Investment Banking, Corporate Syndicate,
Institutional Sales and Trading, Equity Research, Options Trading and a
portion of the Debt Capital Markets business which includes Convertible Bond
Trading, Loan Syndication, High Yield Origination and Trading as well as
related operations located in the U.K, Israel and Hong Kong. Annualized
revenue of these businesses, based on CIBC's most recently published results
for the nine months ended July 31, 2007, is in excess of $400 million.
Closing, subject to applicable regulatory approval, is expected to occur on
January 2, 2008 with respect to the U.S. domestic operations. A second closing
is anticipated for the overseas operations following regulatory approval.
Albert ("Bud") 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. Our 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."
"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."
The purchase price for the transaction is comprised of (1) an earn-out
based on the annual performance of the combined Capital Markets Division of
Oppenheimer & Co. Inc. and the acquired businesses for the calendar years 2008
through 2012, (in no case to be less than $5 million per year) to be paid in
the first quarter of 2013 (the "Earn-Out Date"). On the Earn-Out Date, 25% of
the earn-out will be paid in cash and the balance may be paid, at
Oppenheimer's option, in any combination of cash, Oppenheimer's Class A Shares
(at the then prevailing market price) and/or debentures to be issued by
Oppenheimer payable in two equal tranches - 50% one year after the Earn-Out
Date and the balance two years after the Earn-Out Date plus (2) warrants to
purchase 1,000,000 Class A non-voting shares of Oppenheimer at $48.63 per
share exercisable five years from closing, and (3) cash consideration at
closing equal to the book value of certain fixed assets being acquired.
As part of the transaction, Oppenheimer will borrow $100 million from
CIBC in the form of a five-year subordinated loan, to support the newly
acquired businesses. In addition, CIBC will provide a warehouse facility,
initially up to $1.5 billion, to a newly formed U.S. entity to finance the
syndicated loans of middle market companies that are syndicated and
distributed by the Loan Syndication and Loan Trading Groups being acquired.
Underwriting of loans pursuant to the warehouse facility will be subject to
joint credit approval by Oppenheimer and CIBC.
This press release includes certain "forward-looking statements" relating
to anticipated future performance. For a discussion of the factors that could
cause future performance to be different than anticipated, reference is made
to Oppenheimer's Annual Report on Form 10-K for the year ended December 31,
Oppenheimer, 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. Oppenheimer 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,
Oppenheimer offers online discount brokerage and dollar-based investing
For further information:
For further information: Albert G. Lowenthal, (212) 668-8000; Elaine K.
Roberts, (416) 322-1515; Media Contact: Brian Maddox, (212) 850-5661