Fifth Third Bancorp Expands in Commercial With $11B Acquisition of Comerica
Fifth Third Bancorp has made a big expansion into commercial, with its announced acquisition today of Comerica Inc. for $10.9 billion, which will create a new combined company. The deal, valued at $82.88 per share, represents a 20 percent premium to Comerica's 10-day average volume stock price.
The move will combine for $288 billion in assets. Together, the two financial institutions will serve as the ninth-largest bank in the country, according to Fifth Third.
The plan is for the new entity to operate in 17 of the fastest-growing 20 regions in the U.S. Currently, Comerica owns banks in states including Michigan, Texas, California, Florida and Arizona, while working on expansion plans in the Mountain West region in Colorado and North Carolina. Meanwhile, more than 50 percent of Comerica's branches are projected to be located in Texas, Arizona, California and the Southeast by 2030.
Moreover, Fifth Third said that the move will boost its footprint in the commercial space. The new company will operate Wealth and Asset Management and Commercial Payments, which serve as two $1 billion units and generate returns from fees.
Plus, Comerica provides lending options through CRE, such as for construction loans, commercial mortgages, acquisitions and bridge financing.
“Our unique approach to relationship banking has served our customers for nearly two centuries,” Curt Farmer, chairman, president and CEO of Comerica, said in a statement.
“Joining with Fifth Third – with its strengths in retail, payments and digital – allows us to build on our leading commercial franchise and further serve our customers with enhanced capabilities across more markets, while staying true to our core values. I am confident that we will be better together, and our customers, shareholders and communities will benefit.”
Fifth Third will hold about a 73 percent stake in the new firm, while Comercia will have roughly 27 percent interest. It's unclear if the two banks will rebrand into a different name. Farmer will serve as the vice chair in the new company, while Fifth Third’s Wealth & Asset Management unit will be run by Comerica’s Chief Banking Officer, Peter Sefzik.
Comerica and Fifth Third anticipate the deal, subject to conditions, closing in the first quarter of next year.
Source: GlobeSt/ALM