Fifth Third Shares Fall on $10.9B All-Stock Deal to Buy Comerica
Investor concerns over dilution and integration risk weigh on the acquirer's stock following the merger announcement.
Fifth Third Bancorp (NASDAQ: FITB) saw its shares fall approximately 4% in pre-market trading after announcing it will acquire Comerica Incorporated (NYSE: CMA) in a $10.9 billion all-stock transaction. The dip reflects a typical market reaction for an acquiring company, as investors weigh the prospects of future growth against the immediate risks of shareholder dilution and complex integration.
The will create the ninth-largest U.S. bank, boasting combined assets of around $288 billion. Under the terms, Comerica stockholders will receive 1.8663 Fifth Third shares for each Comerica share they own. Upon completion, Fifth Third shareholders are expected to own approximately 73% of the combined company, with Comerica shareholders holding the remaining 27%.
Executives positioned the deal as a strategic move to enhance scale and accelerate growth in key markets. The merger combines Fifth Third's strength in retail banking with Comerica's robust middle-market commercial franchise, expanding the new entity's presence in 17 of the 20 fastest-growing markets in the United States, including Texas and California. The move is expected to create a stronger competitor against the nation's megabanks.
Despite the strategic rationale, the immediate stock drop highlights investor apprehension. All-stock deals, while preserving cash, dilute the ownership stake of existing shareholders. Furthermore, the process of integrating two large banking institutions carries significant execution risk, with potential challenges in merging corporate cultures, technology platforms, and regulatory compliance frameworks.
Wall Street analysts will be closely watching the integration process and whether the promised synergies materialize. Despite the initial negative stock reaction, the banks project the deal will be immediately accretive to shareholders, with a 9% earnings per share accretion and no tangible book value dilution. The transaction has also sparked within the industry. The acquisition is anticipated to close at the end of the first quarter of 2026, subject to regulatory and shareholder approvals.