Hold - Price 39.74 on Oct. 3
by Sandler O'Neill
CBH will be acquired by TD Banknorth in a deal valued at $8.5 billion, or about 42 per share. The deal is structured as 75% stock and 25% cash and is expected to close in 1Q08. The deal value represents multiples of 306% tangible book value, 28 times [last 12 months] earnings per share, and a 14% core deposit premium. When former CEO Vernon Hill left the company in July, we suggested we thought a sale was likely and the deal price was likely to be between 43 and 45. We suspect...it was a bit lower because Commerce was negotiating from a position of weakness (i.e., regulatory issues), and many of the logical buyers were not in a position to consider this acquisition.

Hold - Price 39.74 on Oct. 3
by Sandler O'Neill
CBH will be acquired by TD Banknorth in a deal valued at $8.5 billion, or about 42 per share. The deal is structured as 75% stock and 25% cash and is expected to close in 1Q08. The deal value represents multiples of 306% tangible book value, 28 times [last 12 months] earnings per share, and a 14% core deposit premium. When former CEO Vernon Hill left the company in July, we suggested we thought a sale was likely and the deal price was likely to be between 43 and 45. We suspect...it was a bit lower because Commerce was negotiating from a position of weakness (i.e., regulatory issues), and many of the logical buyers were not in a position to consider this acquisition.

If the purch price is $42 by TD, why isn't the stock trading that high?

takeover potential

Downgraded by Sun Trust Rbsn Humphrey from Buy to Neutral

TAKEOVER TARGET

Upgraded by RBC Capital Mkts from Underperform to Sector Perform

With the ouster of founder and chairman Vernon Hill, this regional bank now becomes a prime takeover target.

ouch! But good bank

Downgraded by Oppenheimer from Buy to Neutral

regional banks are hurting

LOW ROA + CEO PROBLEMS

Firm does not believe earnings trends support this multiple. Also does not believe yield curve will accomodate the company soon. Further, Florida expansion may not succeed as demographic favors highe rate over 7 day service.

Expensive. Hairy. Regional banks will struggle.

Bankrupt business model. Cannot keep up the growth with making a big, probably dilutive acquisition. Competitors have cherry-picked their best ideas. Stock too rich to be bought by a competitor.