CIBC Wood Gundy to Buy Oppenheimer

Canadian Imperial Bank of Commerce said Tuesday that it agreed to buy Oppenheimer & Co. for $525 million, CIBC’s latest and biggest step in expanding its U.S. securities business.

CIBC Wood Gundy Securities Corp., the investment banking arm of the Toronto-based bank, would pay $350 million for closely held Oppenheimer at the close of the transaction, and an additional $175 million over as many as three years to retain about 40 key Oppenheimer employees.

“This is a major strategic move for CIBC,” said John Leonard, an analyst with Salomon Bros. in London. “It really means they’ve made the commitment that they are at least a sizable medium-scale player in the U.S. institutional equity market.”

CIBC, Canada’s second-largest bank behind Royal Bank of Canada, ran a small corporate lending business in the United States before buying broker Wood Gundy Inc. in 1988, a year after Canada’s financial services industry was deregulated. Since then, its New York unit has built derivative, junk-bond and loan-syndication businesses.

The combined companies would be called CIBC Oppenheimer Corp. Michael Rulle, chairman and chief executive of CIBC Wood Gundy, would become chairman and chief executive of CIBC Oppenheimer and continue as head of CIBC Wood Gundy’s U.S. operations.

Oppenheimer Chairman Stephen Robert and President Nathan Gantcher, who together own almost 40% of the firm, would become vice chairmen of CIBC Oppenheimer. The transaction is expected to close by the end of the year.

The acquisition gives CIBC its first foothold in stock underwriting in the United States, one of Wall Street’s most lucrative businesses.

“We think it would have been very difficult to build an equity business on our own,” Rulle said in an interview.

“We now have the ability to offer a full range of financing and advisory products that, as separate firms, we didn’t have the capability to do.”

Rulle said he didn’t expect any job cuts as a result of the merger.