CIBC announced on Wednesday that it has reached a definitive agreement with Merrill Lynch Canada Inc. to acquire its retail brokerage, asset management and Canadian securities services businesses.

The retail brokerage and Canadian securities services transaction is subject to regulatory approval, which is expected by December 31.

The asset management transaction, which involves the acquisition of Merrill Lynch Investment Managers Canada Inc., manager of the 41 Merrill Lynch mutual funds, is also subject to regulatory approval and client notification. It is expected to be completed by January 31, 2002.

The acquisition is priced in a range from $475-$650 million with the final purchase price expected to be between $500-$600 million, depending on the number of financial consultants joining CIBC Wood Gundy.

A cash settlement of this purchase price would reduce CIBC’s tier one capital ratio by between 35 and 45 basis points — leaving it well within CIBC’s targeted capitalization ratio

The Merrill Lynch Canada retail brokerage business will combine with CIBC Wood Gundy. The combined entity will operate under the CIBC Wood Gundy name and will have a retail sales force of more than 1,600 financial consultants, managing over $85 billion in assets for clients across Canada.

“With the addition of Merrill Lynch Canada, CIBC Wood Gundy secures its place as Canada’s premier retail brokerage firm and assembles one of the largest networks of financial consultants of any private client brokerage organization,” said John Hunkin, CIBC chairman and CEO. “This acquisition is a major building block in CIBC’s strategy to grow our wealth management operations.”

The sale does not include Merrill Lynch’s corporate and institutional client businesses in Canada, which are unaffected by the move.

The sale does not include the firm¹s corporate and institutional businesses. “We are committed to maintaining our presence in Canada and we will seek to build on our leadership position in serving corporate and institutional clients,” said Arshad Zakaria, co-head of Merrill Lynch’s Corporate and Institutional Client Group. “Our recent investment banking transactions in Canada demonstrate Merrill Lynch’s commitment to our corporate and institutional clients.

“With many of the leading financial consultants and a presence in key
markets across the country, Merrill Lynch’s private client business in Canada has considerable strengths,” said Michael Marks, chairman of Merrill Lynch’s International Private Client Group and Merrill Lynch Investment Managers, and Kelly Martin, president of IPCG. “However, after a thorough review of the business, we are confident that the sale of the business to CIBC represents the best way forward for our clients, employees and shareholders.”

“This transaction aligns with our strategic focus to build our CIBC Wealth Management advisory salesforce capabilities,” said Gerry McCaughey, senior executive vice-president of CIBC Wealth Management. “And it is an excellent strategic fit for CIBC Wood Gundy, as we continue to build our advisory advice offer, with a focus on asset management and insurance.”

The new CIBC Wood Gundy will be led by Tom Monahan, the current head of CIBC Wood Gundy. An integrated executive team from CIBC Wood Gundy and Merrill Lynch Canada will support Monahan and oversee a smooth and timely integration for both financial consultants and clients.