Vice Chancellor Zurn of the Delaware Court of Chancery issued a clear and forceful opinion rejecting an activist investor’s application to enjoin the closing of the Comerica/Fifth Third merger. In what should be mandatory reading for everyone involved in financial institution transactions, Vice Chancellor Zurn thoughtfully reviewed and rejected each of HoldCo’s complaints about mutual deal protection terms that have long been standard for U.S. bank mergers. HoldCo Opp. Fund V, L.P. v. Angulo, C.A. No. 2025-1360-MTZ (Del. Ch. Jan. 26, 2026).
Among the common contractual terms assessed by the Court were fiduciary outs, outside dates, and reciprocal termination fees. The Comerica/Fifth Third merger featured provisions of the type that we have long advised are appropriate for strategic mergers and demonstrate to the parties and the market a highly certain closing:
- A reciprocal termination fee of roughly 4.7% of target equity value at announcement, payable in limited circumstances primarily tied to competing offers;
- A 12-month outside date with strong commitments to obtain regulatory approvals over the life of the deal;
- A customary no-shop provision;
- A force-the-vote provision and a commitment on each party to use reasonable best efforts to obtain stockholder approvals, including a standard restructuring covenant; and
- An appropriate and reciprocal ability for each Board to communicate with its stockholders and change its recommendation, if required by its fiduciary duties, subject to customary notice and matching rights.
The Court’s cogent analysis applied longstanding Delaware doctrine to reject the plaintiff’s Omnicareand Unocal claims, finding that they turned on “unambiguous contractual language and dispositive authority” and failed to even “raise a colorable claim.”
The Court and all the parties had previously witnessed a vote-no campaign that failed spectacularly, with over 97% (99% excluding the activist) of votes cast by Comerica’s stockholders approving the merger. The lonely campaign, conducted through a series of factually misleading presentations spiced up with song lyrics, had no effect on the views of any investors. In its opinion, the Court noted its concern that the activist was “taking excessive liberties with the facts” and promoting positions that found “no basis in logic or the record.”
The Comerica/Fifth Third merger is not only noteworthy for its size and significance among regional bank mergers, but also the superior financial terms and deal certainty delivered to Comerica stockholders by the Comerica Board. The premium to the unaffected stock price was 32% at announcement, and subsequently grew to more than 50% measured at Fifth Third’s 52-week trading high, as the market recognized the strategic and operating performance of Fifth Third and the value to be created by the deal. All of this occurred while the merger was approved by the OCC only 48 days after filing the application, a result directly attributable to the management strength and regulatory standing of both companies.
Bank boards and executive management should take comfort in this opinion, which affirms the basic judicial deference to carefully exercised business judgment. Boards, like Comerica’s, that faithfully serve the interests of their stockholders and seek to reasonably protect a well-constructed merger will not be second-guessed.
