DETROIT, August 4, 2006 – Comerica Incorporated (NYSE:CMA) today announced it has reached a definitive agreement to sell its stake in Munder Capital Management to an investor group comprising Crestview Partners, L.P. and Munder’s management. Grail Partners, LLC, which advised Munder’s management team, will also invest in the buyout. Munder provides investment advisory services to institutions, municipalities, unions, charitable organizations and private investors, and also serves as investment advisor for Munder Funds.
Munder has approximately $41 billion in total assets under management. As a part of the transaction, Munder will continue to manage $25.1 billion in assets, which includes $9.1 billion in actively managed equity securities; $6.3 billion in fixed income securities; and $9.7 billion in cash management assets. Comerica will obtain full ownership in World Asset Management, an internal division of Munder with $15.9 billion in indexed assets under management.
For its approximately 90 percent fully diluted interest in Munder, Comerica expects to receive $302 million and Munder management’s interest in World Asset Management. The $302 million will consist of a cash payment of $232 million, payable upon closing, and an additional payment in the form of an eight percent interest-bearing, seven-year note with an initial principal amount of $70 million. The $70 million principal amount would be realized if Comerica client-related revenues received by Munder remain consistent with current levels. The principal amount of the note may be increased to a maximum of $80 million or decreased depending on the level of such revenues earned in the five years following the closing of the transaction. Repayment of the principal is scheduled to begin after the sixth anniversary of the closing of the transaction and to be paid off within one year.
Completion of the closing, which is currently anticipated in late 2006, is subject to certain regulatory and third party approvals and the satisfaction of other customary conditions.
Comerica expects it will recognize an initial after-tax gain from the sale of Munder in the range of $100 - $110 million upon closing. Future gains related to the note are expected to be recognized periodically as revenue targets from Comerica-referred sources are achieved. The potential future gains are expected to occur between the end of 2007 and the fourth quarter of 2011, unless fully earned prior to that time.
Ralph W. Babb Jr., chairman and chief executive officer of Comerica said, “This transaction is the right move for our clients and shareholders. We will continue to offer clients a full suite of products, including Munder’s investment management products. At the same time, Comerica intends to use the proceeds from the sale of Munder to advance its strategy of investing in growth markets and businesses and to repurchase shares.
“This transaction is aligned with our strategy, which includes applying our proven relationship-driven model to higher growth markets, maintaining strong credit quality controls, and growing and balancing our mix of business to deliver attractive shareholder returns. An important element of that strategy is to grow our Wealth & Institutional Management platform. We are proud of our association with Munder and look forward to a long and lasting relationship with them.
