Comerica to Buy Imperial Bancorp in $1.3 Billion Stock Deal

Updated from 9:30 a.m. EST

Comerica(CMA Quote), a regional bank based in Detroit, said Wednesday that it had agreed to acquire Los Angeles-based Imperial Bancorp (IMP Quote) in an all-stock deal that would create the fourth-largest bank in California and the 19th largest bank in the nation.

The companies initially valued the deal at about $1.3 billion, based on Tuesday's closing stock prices. But Wall Street reacted negatively to the acquisition, sending Comerica's shares falling sharply. That reduced the total value of the stock in the deal to about $1.16 billion.

Comerica's stock fell $5.19, or 8.6%, to close at $55.13 Wednesday, after trading as low as $53.56.

Under the terms of the deal, shareholders of Imperial will receive approximately 21 million shares of Comerica common stock under a 0.46 fixed exchange ratio. The deal, based on Tuesday's closing prices, had valued Imperial at $27.74 a share, or a 14% premium. But with Wednesday's selloff, Imperial shareholders would receive stock valued at $25.36 a share, less than a 4% premium over Imperial's current price.

The disappearing premium weighed on Imperial's stock, which ended trading up only 13 cents, or 0.5%, at $24.44.

The deal would bring together two banking companies that are highly focused on middle-market, small business, title and escrow deposits and on entertainment lending in California and nationwide.

The deal is not expected to have an impact on Comerica's earnings per share in 2001, not including a $145 million charge the company expects to take. It will add about 5% to the company's bottom line in 2002, the companies said in a statement.

The combination is expected to result in cost-savings by eliminating some administrative costs. Comerica plans to reduce expenses by 20% of Imperial's expense base over the next two years.

Comerica has $26 billion in deposits and $41 billion in total assets, while Imperial has $7 billion in deposit and $7 billion in