Comerica's Sale Under Fire: Lawsuit Alleges Undervalued Deal

NEWTOWN SQUARE, PA – December 05, 2025 – The proposed $10.9 billion mega-merger between Comerica Inc. and Fifth Third Bancorp, a deal poised to create the ninth-largest bank in the United States, is facing significant legal headwinds. A shareholder class action lawsuit, filed by Kaskela Law LLC, alleges that the acquisition process was tainted by conflicts of interest and that the agreed-upon price substantially undervalues Comerica, potentially shortchanging its investors. The complaint paints a picture of a CEO acting to preserve his career and a board that failed its fiduciary duty by locking up a deal that may not be in the best interest of all shareholders.

The lawsuit, filed in the wake of the deal's announcement, seeks to represent Comerica stockholders who believe the buyout price is too low. It brings to the forefront critical questions about corporate governance, executive motivations, and the mechanisms designed to protect shareholder value during transformative M&A transactions. As the legal battle unfolds, it threatens to complicate, delay, or even derail a merger that was presented as a strategic masterstroke for both financial institutions.

The Anatomy of a Contested Deal

Announced on October 6, 2025, the all-stock transaction was structured to give Comerica stockholders 1.8663 shares of Fifth Third common stock for each share of Comerica they own. At the time of the announcement, this equated to a per-share price of $82.88, representing a 20% premium over Comerica's 10-day volume-weighted average stock price. Upon completion, the combined entity would boast an estimated $288 billion in assets under management and a formidable presence in 17 of the 20 fastest-growing markets in the U.S., including key hubs in Texas, California, and the Southeast.

Central to the deal's structure—and the subsequent lawsuit—are the planned post-merger leadership roles. The agreement stipulates that Comerica's CEO, Curt Farmer, will assume the role of Vice Chair in the newly combined company. Additionally, Peter Sefzik, Comerica's chief banking officer, is slated to lead Fifth Third's expansive Wealth & Asset Management business, and three members of Comerica's board are set to join the board of the new entity. While such arrangements can be standard practice to ensure continuity, the lawsuit alleges that these roles, particularly Farmer's, were a primary motivation for pursuing the deal with Fifth Third specifically, rather than maximizing value for shareholders through a competitive bidding process.

The transaction is contingent upon shareholder approval from both companies, with a vote scheduled for January 6, 2026, as well as customary regulatory clearances. However, the emergence of shareholder litigation adds a significant layer of uncertainty to this timeline.

Activist Pressure and a 'Friendly White Knight'

The lawsuit's most explosive claim centers on the events leading up to the merger negotiations. According to the complaint, Comerica's leadership was under intense pressure from an activist investor, identified in market reports as HoldCo Asset Management, which held a 1.8% stake in the company. The activist firm had reportedly been advocating for significant changes, including calling for CEO Curt Farmer's termination.

It is in this context that the lawsuit alleges Farmer "raced to find a friendly white knight that could provide him with a lucrative post-closing role." The timeline appears to support the narrative of a rapidly executed deal. Filings and reports indicate that Farmer initiated contact with Fifth Third's CEO, Tim Spence, on September 18, 2025. A definitive merger agreement was signed just 17 days later—an exceptionally swift timeline for a transaction of this magnitude and complexity. This speed has raised questions about whether Comerica's board conducted a thorough evaluation of all strategic alternatives.

Adding another dimension to these concerns are reports that Comerica had received an offer from at least one other financial institution, believed to be Regions Financial, before engaging with Fifth Third. The lawsuit implies that the board may have prioritized the deal with Fifth Third due to the favorable post-merger roles it offered to existing Comerica executives, rather than pursuing a potentially higher offer from another suitor. This narrative suggests the merger was less a strategic imperative and more a defensive maneuver designed to placate an activist and secure executive futures.

'Improperly Locked Up': Scrutiny on Deal Protections

Further fueling the legal challenge are allegations that Comerica's board "improperly locked up the merger through preclusive deal protections." These provisions, common in M&A agreements, are intended to provide deal certainty for the acquirer. They can include substantial termination fees payable if the target company accepts a superior offer, and "no-shop" clauses that prevent the target from soliciting competing bids.

The Kaskela Law complaint argues that the protections included in the Comerica-Fifth Third agreement were so restrictive that they were effectively designed to "ensure that no superior bid emerges." If a court agrees, it could rule that the board breached its fiduciary duty to secure the best possible outcome for shareholders. This aspect of the case has already drawn judicial attention, with a judge ordering Comerica to provide additional documentation regarding its board's communications leading up to the agreement.

This legal scrutiny places the board's decision-making process under a microscope. The core question is whether these deal protections served to secure a good deal for shareholders or to entrench a deal that primarily benefited the company's management. The outcome could have broad implications for how such clauses are structured in future M&A transactions, particularly when a company is under activist pressure.

The Question of Value and Shareholder Rights

While Fifth Third's offer included a 20% premium over a recent trading average, the lawsuit contends this figure is misleading and fails to reflect Comerica's intrinsic value. The involvement of multiple law firms, including Portnoy Law Firm, in filing class actions suggests that this sentiment is shared by a notable segment of investors. These firms are now actively encouraging shareholders who acquired stock prior to July 1, 2025, to join the litigation.

The ultimate arbiter of the deal's fate may be the shareholders themselves. The upcoming vote on January 6, 2026, will serve as a referendum on whether investors believe the merger, in its current form, is their best path forward. The ongoing legal challenges and the questions they raise about the deal's origins and fairness will undoubtedly weigh heavily on their decision. The confluence of activist influence, an unusually rapid negotiation process, and allegations of self-dealing has ensured that this proposed banking titan will be forged in the crucible of intense legal and shareholder scrutiny.