Buy Out Canadian Imperial Bank of Commerce (CIBC) in 2008?

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The money CIBC raised in January has quickly been claimed by the $6.5-billion in writedowns taken in the past year related to the U. S. credit crisis. More writedowns are coming this quarter. How much can CIBC sustain before it has to tap equity markets again to shore up its balance sheet? If CIBC has to go back to investors, Mr. Aiken expects it will need $3-billion or more. It would be ugly. In the best case, CIBC would heavily dilute shareholders.

There is a rumor that Manulife (http://finance.google.com...) may acquire CIBC (http://finance.google.com...). Manulife would be a keen buyer of Canada's most dismal bank if domestic financial-services mergers were ever allowed. It has taken a serious look at CIBC in the past and bought a 5% stake when the bank hit up the market for an emergency $2.9-billion equity sale in January.

What will CIBC do?

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STEP 1: My Answer

	ZiiValue (chance)	Answer	MyAnswer (which outcome happened?)	Possible Outcomes
	18%		Merged /bought out by Manulife	Merged /bought out by Manulife
	3%		Merged /bought out by another	Merged /bought out by another
	3%		Raise cap from the market	Raise cap from the market
	74%		Status quo	Status quo
	2%		Other solutions (pls specify)	Other solutions (pls specify)

I Answer

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