Tuesday, February 1, 2011

CI Financial to Buy: CIBC would be a logical choice

Rumors concerning the sale of the firm CI Financial continue to fuel the financial press in the country. This time, a report from CIBC which restarts the machine. Indeed, analyst Paul Holden claims that the buyer the most prominent, Scotiabank, reluctant to acquire the block of shares it does not already own in CI Financial.
It would be rather CIBC would be the best party to conclude such a transaction. According to Paul Holden, CIBC has the financial means necessary to finance the purchase of CI Financial, whose market capitalization is estimated at 6.2 billion. In addition, CIBC has focused its development strategy in the Canadian market since its expansion in the U.S. went wrong.
CI Financial's products would complement well those of CIBC, which has an extensive branch network and, like all major Canadian banks, is interested in developing the market for asset management.
Why should she refuse Scotia to complete the purchase of CI Financial, as she already holds 36% stake in the company? Paul Holden cites several reasons. On the one hand, Scotia is currently integrating the activities of DundeeWealth, a subsidiary of CI Financial, which it acquired last November for $ 2.3 billion. This process will take several more quarters, so it would be surprising if it embarks on another major acquisition. On the other hand, Scotia has referred to international development and would prefer to remain focused on that goal rather than to stop to hold another Canadian network.
Paul Holden doubt that Canadian mutual fund company is strong enough to get hold of CI Financial. Certainly, IGM Financial has the means to afford such a purchase, but its largest shareholder, Power Financial, is more interested in consolidating its presence in the United States and expand its business in Canada. In addition, said Paul Holden, the two entities share entrepreneurial cultures very different.
This new chapter in the saga of CI Financial has not unduly affected investors. In Toronto yesterday, CI Financial's action ended the session at $ 21.45, down $ 0.03.

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