In Wednesday after-hours trading, Dallas-based Comerica Inc. announced that it has received approval from the Board of Governors of the Federal Reserve System to acquire Sterling Bancshares, Inc. (Nasdaq: SBIB). The Texas Department of Banking has also approved the acquisition.
Closing of the deal will be of effect at 12:01 a.m. CT on July 28, 2011, contingent upon the terms and conditions of the merger agreement, and after expiration of the required 15-day Department of Justice waiting period associated with the Federal Reserve Board’s approval order. Sterling shareholders already approved the merger deal on May 5, 2011.
“We continue to be excited about the opportunity to significantly boost our Texas presence with the acquisition of Sterling,” commented Comerica CEO Ralph W. Babb Jr. “Sterling’s branch network is very appealing, and the bank has a very attractive deposit base. We believe these positive attributes give us the ability to leverage additional marketing capacity to offer a wide array of products through a larger distribution network, particularly to middle market companies and small businesses. We are pleased with the timing of this acquisition as we are gaining momentum in our Texas market. We anticipate a smooth and seamless transition. The more work we do and the better we get to know Sterling, the more confident we are in the fit of our two organizations. We look forward to welcoming Sterling customers and employees to Comerica as we begin this new chapter in our Texas banking history.”
The deal, first announced January 18, 2011, will result in each outstanding share of Sterling being exchanged for 0.2365 shares of Comerica stock at closing; fractional shares will be paid in cash.
Ahead of the news, normal trading saw a tepid 1.43% rise of Sterling shares to $7.81 on light volume of 329,461 shares. Sterling shares have traded as high as $9.37 in the past year. Comerica stock closed slightly down Wednesday at $33.10. Based on these closing prices, Sterling shareholders would receive a negligible value edge over the preferred 0.2365 ratio, as the current ratio is only 0.23595. Neither company is seeing much in the lines of shareholder support in today’s trading with both companies down approximately 2 percent heading into the closing bell.
Currently, Comerica has banking operations in Texas, Arizona, California, Florida, and Michigan, with other businesses operating in various other states, plus Canada and Mexico. As of March 31, 2011, Comerica public filings reported total company assets of $55.0 billion.
Comerica is among the twenty largest banking companies in the U.S., sometimes using novel self-promotion techniques, as in 1998 when it acquired the naming rights to the downtown-Detroit stadium of the Detroit Tigers, which it dubbed ‘Comerica Park’, and for which privilege it agreed to pay $66 million over a 30-year period.
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