Investor sues Comerica, claiming “flawed” sale to Fifth Third

HoldCo Asset Management, a recent gadfly to a number of publicly traded banks, has alleged in a lawsuit Comerica’s directors breached their fiduciary duties to investors by rushing into a decision to sell the Dallas company to Fifth Third Bancorp in Cincinnati.

The $78 billion-asset Comerica agreed last month to sell to the $210 billion-asset Fifth Third for $10.9 billion in a deal negotiated over just 17 days, according to a regulatory filing tied to the pending merger. HoldCo, in its lawsuit and in investor materials released earlier this month, claims that the sales process was rushed, conflicted, and fundamentally flawed.

HoldCo has claimed that Comerica downplayed a September overture from another bank. While unnamed in the regulatory filing, several publications have speculated that the suitor was Regions Financial in Birmingham, Ala.

HoldCo levied sharp criticism at Curtis Farmer, Comerica’s chairman and CEO, who was the lead negotiator for the Fifth Third deal. The investor points to Farmer’s post-closing compensation, expected to top $29 million, and Comerica’s decision to have him vet the deal instead of creating a committee.

The regulatory filing noted that Comerica’s board determined that the other offer was preliminary and undervalued the company. HoldCo argues that the board should have sought other bidders after receiving attention from the unnamed suitor.

HoldCo has also taken issue with a clause in the merger agreement that would force Comerica to pay Fifth Third a $500 million breakup fee if it receives a superior unsolicited bid. The investor also claims that the voting arrangement, which lets the transaction remain alive for months even if shareholders reject it, further restricts Comerica’s ability to revisit the market or pursue alternatives.