TLDR
- Fifth Third Bancorp will acquire Comerica for $10.9 billion in an all-stock deal
- Comerica shareholders will receive approximately 1.9 Fifth Third shares for each Comerica share they own, valued at $82.88 per share
- The deal represents a 17.5% premium over Comerica’s Friday closing price
- The merged entity will become the ninth-largest U.S. bank with $288 billion in assets
- Fifth Third shareholders will own about 73% of the combined company, with Comerica investors holding 27%
Comerica shares jumped 14% Monday morning after Fifth Third Bancorp announced plans to acquire the Dallas-based bank for $10.9 billion. The all-stock transaction marks another chapter in regional banking consolidation.
Fifth Third will exchange roughly 1.9 of its shares for each Comerica share. Based on Fifth Third’s Friday closing price, this values Comerica shares at $82.88 each.
That’s a 17.5% premium over where Comerica closed on Friday. For shareholders who’ve watched the stock climb 13% year-to-date, it’s welcome news.
Fifth Third shares dipped slightly more than 1% on the announcement. That’s not unusual when an acquirer pays a premium. The broader regional banking index climbed about 1%.
The Numbers Behind the Deal
The merged bank will control $288 billion in assets. That makes it the ninth-largest bank in the United States.
Fifth Third shareholders will own approximately 73% of the new entity. Comerica investors will hold the remaining 27%.
The deal structure keeps things simple. No cash changes hands, just stock swaps between the two firms.
Both companies’ boards have approved the transaction. Now it heads to regulators and shareholders for final approval.
Fifth Third expects to close the deal by the end of the first quarter next year. That gives roughly five months for regulatory review.
Leadership and Strategy
Tim Spence, Fifth Third’s CEO, called the deal “a natural fit.” He said the combination creates a stronger and more diversified bank.
The Ohio-based Fifth Third gets something it wants: expansion beyond the Midwest. Comerica brings a strong presence in Sun Belt markets where people and businesses are moving.
It also beefs up Fifth Third’s commercial banking operations. That’s been a key part of the bank’s growth strategy.
Comerica CEO Curt Farmer will take on a new role as vice chair of the combined company. Peter Sefzik, currently Comerica’s Chief Banking Officer, will lead the Wealth & Asset Management division.
Three Comerica board members will join the Fifth Third board. This ensures some continuity and representation for Comerica shareholders.
The deal follows the pattern of regional banks joining forces. Rising costs and tighter regulations make it harder for mid-sized banks to compete alone.
Scale matters in banking. Larger institutions can spread fixed costs across more customers and assets.
Fifth Third gets access to Comerica’s customer base and geographic footprint. Comerica shareholders get a premium for their shares and a stake in a larger bank.
The transaction values Comerica at roughly 20% above its recent average trading price. That’s a decent takeout premium in today’s banking environment.
Regional banks have faced pressure from higher interest rates and slower loan growth. Mergers offer a way to boost efficiency and cut duplicate expenses.
The combined bank will have operations spanning from the Midwest through Texas and into other Sun Belt states. That geographic diversity could help smooth out regional economic ups and downs.
Comerica had been trading at $9.07 billion market cap before the announcement. The $10.9 billion deal price reflects the premium Fifth Third is paying to get the deal done.
