Fifth Third-Comerica merger receives overwhelming support from shareholders

Major Bank Merger Gains Shareholder Support Amid Legal Dispute

• Key Point:

  Although shareholders of both Fifth Third and Comerica have overwhelmingly endorsed the planned merger, the banks remain entangled in a lawsuit brought by an activist investor.

• Significance:

  Should the transaction be finalized, it would rank among the most significant bank mergers in the past ten years.

• Next Steps:

  The deal, valued at $10.9 billion, still requires the approval of the Federal Reserve Board and the Texas Department of Banking before it can be completed.

Fifth Third Bancorp and Comerica both received near-unanimous approval from their shareholders for the proposed $10.9 billion merger on Tuesday, despite ongoing resistance from a prominent activist investor.

According to statements released by the banks, 99.7% of Fifth Third shareholders and 97% of Comerica shareholders voted in favor of the merger. Fifth Third CEO Tim Spence described this strong backing as a "significant milestone."

While the companies are still waiting for the Federal Reserve Board's decision, Spence indicated last month that he was confident about finalizing the acquisition in the first quarter of 2026, expressing little concern about regulatory hurdles.

The Office of the Comptroller of the Currency granted its approval for the merger last month, and the Texas Department of Banking followed suit on January 2, according to a Fifth Third spokesperson.

The overwhelming shareholder support aligns with recent recommendations from proxy advisory firms Institutional Shareholder Services and Glass Lewis, both of which concluded that the merger is strategically and financially sound. The combined entity is expected to become a $288 billion-asset bank with a strong presence in the Midwest, Texas, and an expanding reach in the Southeast.

Comerica CEO Curt Farmer commented, "We believe this union between two established institutions will open doors for innovation, deepen our relationships, and enhance our ability to serve customers and communities."

It is uncommon for bank mergers to face substantial shareholder resistance. For example, Capital One Financial's acquisition of Discover Financial Services, despite objections from academics and consumer advocates, ultimately received overwhelming shareholder approval before its completion in May.

However, the recent shareholder vote does not guarantee a smooth path to closing for Fifth Third and Comerica.

HoldCo Asset Management, a hedge fund investor in Comerica, has filed a lawsuit to block the merger. The fund alleges that Comerica failed to conduct a thorough sales process and did not adequately negotiate with Fifth Third, which is based in Cincinnati.

Legal Challenges and Ongoing Disputes

HoldCo began pressuring Comerica to consider a sale last summer. After Comerica, headquartered in Dallas, announced its agreement with Fifth Third in October, HoldCo took legal action. The plaintiffs now aim to use evidence from the discovery process, such as board documents and depositions, to argue in an upcoming hearing that Comerica did not fulfill its obligations to shareholders when seeking a buyer.

Despite the ongoing litigation, Spence stated last month that he anticipated regulatory approval "around the new year" and noted that the company has maintained regular communication with regulators.

"Nothing has arisen that gives me any concern whatsoever," Spence remarked at the time.

Since the merger was announced, Fifth Third's stock price has climbed over 12%, while Comerica's shares have surged more than 30%.

When HoldCo declared last month that it would oppose the merger, the fund argued that rejecting the deal offered "significant upside and limited downside."

HoldCo has criticized Comerica for omitting key information in its initial disclosures, particularly regarding its evaluation of a sale and negotiations with another potential acquirer. While Comerica referred to this party as "Financial Institution A," American Banker later identified it as Regions Financial.

Following the lawsuit, Comerica released additional details about its negotiations with Fifth Third, including financial information from competing bids and insights into the bargaining process.

The two banks reached their merger agreement in just 17 days, making it the fastest major deal of 2025, despite its substantial size.

HoldCo alleges that Comerica rushed into the transaction to avoid a potential proxy battle from the hedge fund in the spring. As of December, HoldCo reported holding approximately $182 million in Comerica shares, representing about 1.6% of the company's outstanding stock.

Both ISS and Glass Lewis, while recommending shareholder approval, acknowledged HoldCo's influence in pushing Comerica to pursue a sale and in prompting greater transparency about the deal's background.

"We believe the supplemental disclosures clearly demonstrate that HoldCo played a pivotal role in encouraging Comerica to consider a sale, and that the company might have continued on its previous course without the activist's involvement," Glass Lewis stated in its report.