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Section 1: DEFM14A (DEFM14A)

DEFM14A
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

 

 

Filed by the Registrant  ☒

Filed by a Party other than the Registrant  ☐

Check the appropriate box:

 

  Preliminary Proxy Statement
  Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
  Definitive Proxy Statement
  Definitive Additional Materials
  Soliciting Material under §240.14a-12

MB FINANCIAL, INC.

(Name of Registrant as Specified In Its Charter)

        

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

  No fee required.
  Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
  (1)  

Title of each class of securities to which transaction applies:

     

  (2)  

Aggregate number of securities to which transaction applies:

     

  (3)  

Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

     

  (4)  

Proposed maximum aggregate value of transaction:

     

  (5)  

Total fee paid:

     

  Fee paid previously with preliminary materials.
  Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
  (1)  

Amount Previously Paid:

     

  (2)  

Form, Schedule or Registration Statement No.:

     

  (3)  

Filing Party:

     

  (4)  

Date Filed:

     

 

 

 


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LOGO

MERGER PROPOSED—YOUR VOTE IS VERY IMPORTANT

August 3, 2018

Dear Stockholder:

On May 20, 2018, MB Financial, Inc., or MB Financial, entered into an Agreement and Plan of Merger, or the merger agreement, with Fifth Third Bancorp, or Fifth Third, and Fifth Third Financial Corporation, or Intermediary, a wholly-owned subsidiary of Fifth Third. The merger agreement provides for the combination of MB Financial and Fifth Third, either through the merger of MB Financial with and into Intermediary, with Intermediary as the surviving corporation, which we refer to as the direct merger, or through the merger of a newly formed subsidiary of Fifth Third with and into MB Financial, with MB Financial as the surviving corporation, which we refer to as the alternative merger. Only if the direct merger is not approved by the MB Financial preferred stockholders will the alternative merger occur instead of the direct merger, if the applicable common stockholder approvals for the alternative merger and charter amendment described below are obtained. We collectively refer to the direct merger and the alternative merger as the merger.

In the merger, each outstanding share of MB Financial common stock will be converted into the right to receive 1.45 shares of Fifth Third common stock and $5.54 in cash, which we refer to as the merger consideration. Additionally, if the direct merger is approved by the holders of MB Financial’s 6.00% Non-Cumulative Perpetual Preferred Stock, Series C, or MB Financial preferred stock, each share of MB Financial preferred stock will be converted into the right to receive one share of a newly created series of preferred stock of Fifth Third having substantially the same terms as the MB Financial preferred stock, except that the new series of Fifth Third preferred stock will have no voting rights (including upon an arrearage in the payment of dividends) except as required by Ohio law and will have certain other differences consistent with Fifth Third’s currently outstanding series of preferred stock and its articles of incorporation. If the direct merger is not approved by the holders of MB Financial preferred stock, then the alternative merger will occur instead of the direct merger, in which case the holders of MB Financial common stock will receive the same merger consideration as described above, but the MB Financial preferred stock will not be converted into a share of new Fifth Third preferred stock and will instead remain outstanding and unchanged (except as modified by the proposed charter amendment referred to below) as preferred stock of MB Financial, which will be a subsidiary of Fifth Third.

Based on the closing price of Fifth Third common stock on the NASDAQ Global Select Market, or NASDAQ, on May 18, 2018, the last trading day before public announcement of the merger agreement, the value of the per share merger consideration payable to holders of MB Financial common stock would be $54.20. Based on the closing price of Fifth Third common stock on the NASDAQ on August 1, 2018, the last practicable trading date before the date of this proxy statement/prospectus, the value of the per share merger consideration payable to holders of MB Financial common stock would be $48.72. Based on the number of shares of MB Financial common stock outstanding and the number of shares of MB Financial common stock issuable pursuant to outstanding MB Financial stock options, restricted stock awards, restricted stock units and performance awards, in each case as of August 1, 2018, the total number of shares of Fifth Third common stock expected to be issued in connection with the merger is approximately 127,245,626. In addition, based on the number of issued and outstanding shares of Fifth Third common stock and MB Financial common stock on August 1, 2018, and based on the exchange ratio of 1.45, holders of MB Financial common stock immediately prior to the closing of the merger will hold, in the aggregate, approximately 16% of the issued and outstanding shares of Fifth Third common stock immediately following the closing of the merger (without giving effect to any shares of Fifth Third common stock held by MB Financial stockholders prior to the merger). Based on the number of shares of MB Financial preferred stock and the number of depositary shares, each representing a 1/40th interest in a share of MB Financial preferred stock, outstanding as of August 1, 2018, the total number of shares of new Fifth Third preferred stock expected to be issued in connection with the merger is 200,000 and the total number of depositary shares expected to be issued in respect of the new Fifth Third preferred stock is 8,000,000. The depositary shares issued in respect of the new Fifth Third preferred stock are expected to be listed on the NASDAQ Global Select Market. As indicated above, if the alternative merger occurs instead of the direct merger, the MB Financial preferred stock will remain outstanding and no new Fifth Third preferred stock will be issued.

MB Financial will hold a special meeting of its stockholders at which the holders of MB Financial preferred stock will be asked to approve the direct merger, and the holders of MB Financial common stock will be asked to approve the merger (whether effected as the direct merger or, in the event the MB Financial preferred stockholders fail to approve the direct merger, as the alternative merger) and an amendment to MB Financial’s charter and articles supplementary for the MB Financial preferred stock, which we refer to as the charter amendment, that would give the holders of MB Financial preferred stock the right to vote with the holders of MB Financial common stock as a single class on all matters submitted to a vote of such common stockholders, effective immediately prior to the consummation of the alternative merger, and


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related matters. The special meeting will be held on September 18, 2018, at 8:30 a.m., local time, at MB Financial Center, 6111 North River Road, Rosemont, Illinois 60018.

The direct merger cannot be completed unless the MB Financial common stockholders and MB Financial preferred stockholders approve the direct merger. The alternative merger cannot be completed unless MB Financial common stockholders approve the alternative merger and, if the MB Financial preferred stockholders fail to approve the direct merger, the charter amendment. Only if the direct merger is not approved by the MB Financial preferred stockholders will the alternative merger occur instead of the direct merger, if the applicable common stockholder approvals for the alternative merger are obtained. Therefore, it is essential that MB Financial common stockholders approve both the merger (which will constitute approval of both the direct merger and the alternative merger) and the charter amendment to ensure the merger can be completed in the event the MB Financial preferred stockholders fail to approve the direct merger.

Computershare Inc. and Computershare Trust Company N.A., which we refer to collectively as the depositary, holds of record all of the outstanding shares of MB Financial preferred stock on behalf of the holders of depositary shares, each representing a 1/40th interest in a share of MB Financial preferred stock. The depositary is required to vote the MB Financial preferred stock in accordance with the instructions of the holders of the depositary shares. Where we refer to holders of MB Financial preferred stock, this includes holders of depositary shares representing interests in MB Financial preferred stock unless the context indicates otherwise.

YOUR VOTE IS VERY IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES OR DEPOSITARY SHARES YOU OWN. To ensure your representation at the special meeting, please complete and return the enclosed proxy card or submit your proxy by following the instructions contained in this proxy statement/prospectus and on your proxy card. Please vote promptly whether or not you expect to attend the special meeting. If you hold your shares or depositary shares in “street name,” you should instruct your broker, bank or other nominee how to vote in accordance with the voting instruction form you receive from your broker, bank or other nominee.

The MB Financial Board of Directors has unanimously approved the merger agreement and the transactions contemplated thereby and recommends that holders of MB Financial preferred stock vote “FOR” the direct merger and that holders of MB Financial common stock vote “FOR” the merger, “FOR” the charter amendment and “FOR” a proposal to approve, on a non-binding advisory basis, the compensation to be paid to MB Financial’s named executive officers that is based on or otherwise relates to the merger, discussed in the accompanying proxy statement/prospectus under the section entitled “The Merger—Interests of MB Financial Directors and Executive Officers in the Merger” beginning on page 70.

This proxy statement/prospectus provides you with detailed information about the proposed transaction. It also contains or references information about Fifth Third and MB Financial and certain related matters. You are encouraged to read this proxy statement/prospectus carefully. In particular, you should read the “Risk Factors” section beginning on page 27 for a discussion of the risks you should consider in evaluating the proposed transaction and how it may affect you.

If you have any questions regarding the accompanying proxy statement/prospectus, you may contact D.F. King, MB Financial’s proxy solicitor, by calling toll-free at (800) 431-9645.

Sincerely,

 

LOGO

Mitchell Feiger

President and Chief Executive Officer

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the merger, the charter amendment, the issuance of Fifth Third common shares or the new Fifth Third preferred stock in connection with the merger or the other transactions described in this proxy statement/prospectus, or passed upon the adequacy or accuracy of the disclosure in this proxy statement/prospectus. Any representation to the contrary is a criminal offense.

The securities to be issued in connection with the merger are not savings accounts, deposits or other obligations of any bank or savings association and are not insured by the Federal Deposit Insurance Corporation or any other governmental agency.

This proxy statement/prospectus is dated August 3, 2018, and is first being mailed to stockholders of MB Financial on or about August 3, 2018.


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WHERE YOU CAN FIND MORE INFORMATION

Both Fifth Third and MB Financial file annual, quarterly and special reports, proxy statements and other business and financial information with the Securities and Exchange Commission (the “SEC”). You may read and copy any materials that either Fifth Third or MB Financial files with the SEC at the SEC’s Public Reference Room at 100 F Street, N.E., Room 1580, Washington, D.C. 20549, at prescribed rates. Please call the SEC at (800) SEC-0330 ((800) 732-0330) for further information on the public reference room. In addition, Fifth Third and MB Financial file reports and other business and financial information with the SEC electronically, and the SEC maintains a website located at www.sec.gov containing this information. You will also be able to obtain these documents, free of charge, from Fifth Third at ir.53.com under “SEC Filings,” or from MB Financial by accessing MB Financial’s website at investor.mbfinancial.com under the “Financial Information” tab and under the heading “SEC Filings.”

Fifth Third has filed a registration statement on Form S-4 of which this proxy statement/prospectus forms a part. As permitted by SEC rules, this proxy statement/prospectus does not contain all of the information included in the registration statement or in the exhibits or schedules to the registration statement. You may obtain a free copy of the registration statement, including any amendments, schedules and exhibits at the addresses set forth below. Statements contained in this proxy statement/prospectus as to the contents of any contract or other documents referred to in this proxy statement/prospectus are not necessarily complete. In each case, you should refer to the copy of the applicable contract or other document filed as an exhibit to the registration statement. This proxy statement/prospectus incorporates by reference documents that Fifth Third and MB Financial have previously filed with the SEC. These documents contain important information about the companies and their financial condition. See “Incorporation of Certain Documents by Reference” beginning on page 133. These documents are available without charge to you upon written or oral request to the applicable company’s principal executive offices. The respective addresses and telephone numbers of such principal executive offices are listed below. 

 

Fifth Third Bancorp

Fifth Third Center

38 Fountain Square Plaza

Cincinnati, Ohio 45202

(800) 972-3030

  

MB Financial, Inc.

800 West Madison Street

Chicago, Illinois 60607

(888) 422-6562

To obtain timely delivery of these documents, you must request the information no later than September 11, 2018 in order to receive them before the special meeting of stockholders.

Fifth Third common shares are traded on the Nasdaq Global Select Market under the symbol “FITB,” MB Financial common stock is traded on the Nasdaq Global Select Market under the symbol “MBFI” and the depositary shares, each representing a 1/40th interest in a share of MB Financial preferred stock, are traded on the Nasdaq Global Select Market under the symbol “MBFIO.”


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LOGO

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS TO BE HELD ON SEPTEMBER 18, 2018

NOTICE IS HEREBY GIVEN that a special meeting of stockholders of MB Financial, Inc. (which we refer to as “MB Financial”) will be held on September 18, 2018, at 8:30 a.m. local time, at MB Financial Center, 6111 North River Road, Rosemont, Illinois 60018, for the following purposes:

 

  1.

For the holders of MB Financial’s 6.00% Non-Cumulative Perpetual Preferred Stock, Series C (which we refer to as “MB Financial preferred stock”), voting as a separate class from the MB Financial common stock, to approve the merger of MB Financial with and into Fifth Third Financial Corporation (which we refer to as “Intermediary”), a wholly-owned subsidiary of Fifth Third Bancorp (which we refer to as “Fifth Third”), with Intermediary surviving this merger, pursuant to the Agreement and Plan of Merger, dated as of May 20, 2018 (as such agreement may from time to time be amended, which we refer to as the “merger agreement”), by and among Fifth Third, Intermediary and MB Financial. We refer to this transaction as the “direct merger” and this proposal as the “preferred stockholder merger proposal.”

 

  2.

For the holders of MB Financial common stock to approve the merger of MB Financial with a subsidiary of Fifth Third, which will be the direct merger if the holders of MB Financial preferred stock approve the preferred stockholder merger proposal, or the merger of a newly-formed subsidiary of Fifth Third with and into MB Financial, with MB Financial surviving that merger (which we refer to as the “alternative merger”), if the holders of MB Financial preferred stock do not approve the preferred stockholder merger proposal. We collectively refer to the direct merger and the alternative merger as the “merger” and this proposal as the “common stockholder merger proposal.”

 

  3.

For the holders of MB Financial common stock to approve an amendment to the charter of MB Financial and the articles supplementary to the charter of MB Financial relating to the MB Financial preferred stock that would give the holders of MB Financial preferred stock the right to vote with the holders of MB Financial common stock as a single class on all matters submitted to a vote of such common stockholders (which we refer to as the “charter amendment”), to become effective immediately prior to consummation of the alternative merger in the event the holders of MB Financial preferred stock do not approve the preferred stockholder merger proposal. We refer to this proposal as the “charter amendment proposal.”

 

  4.

For the holders of MB Financial common stock to approve, on a non-binding, advisory basis, the compensation to be paid to MB Financial’s named executive officers that is based on or otherwise relates to the merger, discussed under the section entitled “The Merger—Interests of MB Financial Directors and Executive Officers in the Merger” beginning on page 70. We refer to this proposal as the “merger-related compensation proposal.

 

  5.

For the holders of MB Financial preferred stock to approve one or more adjournments of the special meeting, if necessary or appropriate to permit further solicitation of proxies from the holders of MB Financial preferred stock in favor of the preferred stockholder merger proposal. We refer to this proposal as the “preferred stockholder adjournment proposal.”

 

  6.

For the holders of MB Financial common stock to approve one or more adjournments of the special meeting, if necessary or appropriate to permit further solicitation of proxies from the holders of MB Financial common stock in favor of the common stockholder merger proposal and/or the charter amendment proposal. We refer to this proposal as the “common stockholder adjournment proposal.”

The affirmative vote of the holders of at least two-thirds of the outstanding shares of MB Financial preferred stock, voting as a separate class from the MB Financial common stock, is required to approve the preferred stockholder merger proposal.


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The affirmative vote of the holders of a majority of the outstanding shares of MB Financial common stock entitled to vote thereon, voting as a separate class from the MB Financial preferred stock, is required to approve each of the common stockholder merger proposal and the charter amendment proposal. The affirmative vote of a majority of the votes cast by the holders of MB Financial common stock is required to approve, on a non-binding, advisory basis, the merger-related compensation proposal and the common stockholder adjournment proposal. The affirmative vote of a majority of the votes cast by the holders of MB Financial preferred stock is required to approve the preferred stockholder adjournment proposal.

MB Financial will transact no other business at the special meeting except for business properly brought before the special meeting or any adjournment or postponement thereof.

The merger cannot be completed unless MB Financial common stockholders approve the common stockholder merger proposal and, if the MB Financial preferred stockholders fail to approve the preferred stockholder merger proposal, the charter amendment proposal. Therefore, it is essential that MB Financial common stockholders approve both the common stockholder merger proposal and the charter amendment proposal to ensure the merger can be completed in the event the MB Financial preferred stockholders fail to approve the preferred stockholder merger proposal. The MB Financial preferred stockholders are not entitled to vote on the charter amendment proposal or the merger-related compensation proposal. The voting by MB Financial common stockholders on the merger-related compensation proposal is advisory only and will have no effect on the separate votes cast on the common stockholder merger proposal or the charter amendment proposal. Approval of the charter amendment proposal is necessary to obtain required tax opinions in the event the alternative merger will occur instead of the direct merger. The proxy statement/prospectus accompanying this notice explains the merger agreement and the transactions contemplated thereby, as well as the proposals to be considered at the special meeting. Please review the proxy statement/prospectus carefully.

The MB Financial Board of Directors has set August 1, 2018 as the record date for the special meeting. Only holders of record of MB Financial common stock and MB Financial preferred stock at the close of business on August 1, 2018 will be entitled to notice of and to vote at the special meeting and any adjournments or postponements thereof.

Computershare Inc. and Computershare Trust Company N.A., which we refer to collectively as the depositary, holds of record all of the outstanding shares of MB Financial preferred stock on behalf of the holders of depositary shares, each representing a 1/40th interest in a share of MB Financial preferred stock. The depositary is required to vote the MB Financial preferred stock in accordance with the instructions of the holders of the depositary shares. Where we refer to “holders of MB Financial preferred stock” or “MB Financial preferred stockholders,” this includes holders of the depositary shares representing interests in the MB Financial preferred stock unless the context indicates otherwise.

YOUR VOTE IS VERY IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES OR DEPOSITARY SHARES YOU OWN. Whether or not you plan to attend the special meeting, please complete, sign, date and mail the enclosed proxy card in the postage-paid envelope provided as soon as possible. You may also submit a proxy by telephone or via the Internet by following the instructions printed on your proxy card. If you hold your shares or depositary shares through a broker, bank or other nominee, you should direct the voting of your shares or depositary shares in accordance with the voting instruction form received from your broker, bank or other nominee.

The MB Financial Board of Directors has unanimously approved the merger agreement and the transactions contemplated thereby and recommends that holders of MB Financial common stock vote “FOR” the common stockholder merger proposal, “FOR” the charter amendment proposal, “FOR” the merger-related compensation proposal and “FOR” the common stockholder adjournment proposal (if necessary or appropriate), and recommends that holders of MB Financial preferred stock vote “FOR” the preferred stockholder merger proposal and “FOR” the preferred stockholder adjournment proposal (if necessary or appropriate).


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If you have any questions or need assistance with voting, please contact our proxy solicitor, D.F. King, toll-free at (800) 431-9645.

Record holders of MB Financial common stock may vote in person at the special meeting by filling out a ballot or may use a proxy authorizing the designated proxies to vote on his, her or its behalf. The depositary will vote the shares of MB Financial preferred stock in accordance with the instructions it receives from holders of depositary shares representing interests in the MB Financial preferred stock.

If you hold shares of MB Financial common stock through a broker, bank or other nominee and wish to vote your shares in person at the special meeting, then you must obtain a legal proxy from the holder of record authorizing you to do so by contacting your broker, bank or other nominee. MB Financial reserves the right to limit admission to the special meeting to stockholders of record and persons holding shares of common stock or depositary shares through a broker, bank or other nominee who provide appropriate documentation of beneficial ownership, such as a recent brokerage account statement.

By Order of the Board of Directors

 

LOGO

Mitchell Feiger

President and Chief Executive Officer

Chicago, Illinois

August 3, 2018


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TABLE OF CONTENTS

 

     Page  

QUESTIONS AND ANSWERS ABOUT THE MERGER AND THE SPECIAL MEETING

     1  

SUMMARY

     9  

The Merger and the Merger Agreement

     9  

Merger Consideration

     9  

Recommendation of the MB Financial Board of Directors

     10  

Opinion of MB Financial’s Financial Advisor

     10  

MB Financial Special Meeting of Stockholders

     11  

MB Financial’s Directors and Executive Officers Have Financial Interests in the Merger

     13  

Treatment of MB Financial Stock Options and Other Equity Awards

     13  

Regulatory Approvals Required for the Merger

     14  

Appraisal Rights

     14  

Conditions to the Merger

     14  

No Solicitation

     15  

Termination; Termination Fee

     15  

The Rights of MB Financial Stockholders Will Change as a Result of the Merger

     16  

Risk Factors

     17  

The Parties

     17  

SELECTED HISTORICAL FINANCIAL DATA FOR MB FINANCIAL

     18  

SELECTED HISTORICAL FINANCIAL DATA FOR FIFTH THIRD

     20  

UNAUDITED COMPARATIVE PER COMMON SHARE DATA

     22  

COMPARATIVE PER SHARE MARKET PRICE AND DIVIDEND INFORMATION

     23  

FIFTH THIRD SHARE REPURCHASES

     24  

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

     25  

RISK FACTORS

     27  

Risks Related to the Merger

     27  

Additional Risks Relating to the New Fifth Third Preferred Stock or MB Financial Preferred Stock

     32  

Risks Relating to the Tax Consequences of the Merger

     33  

Additional Risks Relating to Fifth Third and MB Financial After the Merger

     34  

MB FINANCIAL SPECIAL MEETING OF STOCKHOLDERS

     35  

Date, Time and Place of the Special Meeting

     35  

Purpose of the Special Meeting

     35  

Recommendation of the MB Financial Board of Directors

     35  

Record Date and Quorum

     36  

Required Vote

     36  

Treatment of Abstentions; Failure to Vote

     37  

Proxies and Voting Instructions; Incomplete Proxies and Voting Instructions

     37  

Shares Held in Street Name

     38  

Shares Held Through MB Financial 401(k) Profit Sharing Plan

     38  

Revocability of Proxies/Voting Instructions and Changes to a Vote

     38  

Solicitation of Proxies and Voting Instructions

     39  

Attending the Special Meeting

     39  

MB FINANCIAL PROPOSALS

     40  

Preferred Stockholder Merger Proposal, Common Stockholder Merger Proposal and Charter Amendment Proposal

     40  

Merger-Related Compensation Proposal

     41  

Preferred Stockholder Adjournment Proposal and Common Stockholder Adjournment Proposal

     42  

INFORMATION ABOUT THE COMPANIES

     44  

THE MERGER

     46  

Terms of the Merger

     46  

Conversion of Shares; Exchange and Payment Procedures

     47  

Background of the Merger

     48  


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     Page  

Recommendation of the MB Financial Board of Directors and Reasons for the Merger

     54  

Certain MB Financial Prospective Financial Information

     57  

Opinion of MB Financial’s Financial Advisor

     59  

Fifth Third’s Board of Directors’ Reasons for the Merger

     69  

Management and Board of Directors of Fifth Third After the Merger

     70  

Interests of MB Financial Directors and Executive Officers in the Merger

     70  

Merger-Related Compensation for MB Financial’s Named Executive Officers

     75  

Dividends/Distributions

     78  

REGULATORY APPROVALS REQUIRED FOR THE MERGER

     79  

ACCOUNTING TREATMENT

     81  

PUBLIC TRADING MARKETS

     82  

RESALE OF FIFTH THIRD COMMON SHARES AND NEW FIFTH THIRD PREFERRED STOCK

     83  

THE MERGER AGREEMENT

     84  

Effects of the Merger; Merger Consideration

     84  

Closing and Effective Time of the Merger

     85  

Treatment of MB Financial Stock Options and Other Equity Awards

     85  

Covenants and Agreements

     86  

Representations and Warranties

     92  

Conditions to the Merger

     95  

Termination; Termination Fee

     96  

Effect of Termination

     97  

Amendments, Extensions and Waivers

     97  

Stock Market Listing

     98  

Board of Directors of Fifth Third

     98  

Fees and Expenses

     98  

MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER

     99  

COMPARISON OF STOCKHOLDERS’ RIGHTS

     104  

General

     104  

Comparison of Stockholders’ Rights

     104  

DESCRIPTION OF FIFTH THIRD CAPITAL STOCK

     118  

General

     118  

Shares of Common Stock

     118  

Shares of Preferred Stock

     123  

APPRAISAL RIGHTS

     126  

EXPERTS

     127  

LEGAL OPINIONS

     128  

HOUSEHOLDING OF PROXY MATERIALS

     129  

OTHER MATTERS

     130  

MB FINANCIAL ANNUAL MEETING STOCKHOLDER PROPOSALS

     131  

FIFTH THIRD ANNUAL MEETING SHAREHOLDER PROPOSALS

     132  

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

     133  


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QUESTIONS AND ANSWERS ABOUT THE MERGER AND THE SPECIAL MEETING

The following are answers to certain questions that you may have regarding the merger and the special meeting. We urge you to read carefully the remainder of this proxy statement/prospectus because the information in this section may not provide all the information that might be important to you in determining how to vote. Additional important information is also contained in the appendices to, and the documents incorporated by reference in, this proxy statement/prospectus.

 

Q:

WHAT IS THE MERGER?

 

A:

Fifth Third Bancorp, an Ohio corporation (which we refer to as “Fifth Third”), Fifth Third Financial Corporation, an Ohio corporation and a wholly-owned subsidiary of Fifth Third (which we refer to as “Intermediary”), and MB Financial, Inc., a Maryland corporation (which we refer to as “MB Financial”), have entered into an Agreement and Plan of Merger, dated as of May 20, 2018, as it may be amended from time to time (which we refer to as the “merger agreement”). The merger agreement provides for the combination of MB Financial and Fifth Third, either through the merger of MB Financial with and into Intermediary, with Intermediary as the surviving corporation (which we refer to as the “direct merger”), or through the merger of a newly formed subsidiary of Fifth Third with and into MB Financial, with MB Financial as the surviving corporation (which we refer to as the “alternative merger”). We collectively refer to the direct merger and the alternative merger as the “merger.” Only if the direct merger is not approved by the MB Financial preferred stockholders will the alternative merger occur instead of the direct merger, if the applicable common stockholder approvals for the alternative merger and charter amendment described below are obtained.

MB Financial will hold a special meeting of its stockholders to obtain the required stockholder approvals, and you are being provided with this proxy statement/prospectus in connection with that meeting. A copy of the merger agreement is attached to this proxy statement/prospectus as Appendix A. We urge you to read carefully this proxy statement/prospectus and the merger agreement in their entirety.

 

Q:

WHY AM I RECEIVING THIS DOCUMENT?

 

A:

This proxy statement/prospectus is being provided to MB Financial stockholders to help them decide how to vote their shares with respect to the matters to be considered at the special meeting.

This document constitutes both a proxy statement of MB Financial and a prospectus of Fifth Third. It is a proxy statement because the Board of Directors of MB Financial is soliciting proxies using this document from MB Financial stockholders. It is a prospectus because Fifth Third is offering (i) in connection with the merger, shares of its common stock in partial exchange for the outstanding shares of MB Financial common stock and (ii) in connection with the direct merger, its newly-created series of preferred stock designated 6.00% Non-Cumulative Perpetual Preferred Stock, Series K (which we refer to as the “new Fifth Third preferred stock”), and depositary shares in respect thereof, in exchange for the outstanding shares of MB Financial’s 6.00% Non-Cumulative Perpetual Preferred Stock, Series C (which we refer to as the “MB Financial preferred stock”), and depositary shares in respect thereof. The new Fifth Third preferred stock will have substantially the same terms as the MB Financial preferred stock, except that the new Fifth Third preferred stock will have no voting rights (including upon an arrearage in the payment of dividends) except as required by Ohio law and will have certain other differences consistent with Fifth Third’s currently outstanding series of preferred stock and its articles of incorporation.

 

Q:

WHAT WILL MB FINANCIAL COMMON STOCKHOLDERS RECEIVE IN THE MERGER?

 

A:

If the merger is completed, each share of MB Financial common stock issued and outstanding immediately prior to the effective time of the merger (other than shares owned by MB Financial or Fifth Third), will be

 

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  converted into the right to receive 1.45 shares of Fifth Third common stock (which we refer to as the “exchange ratio”) and $5.54 in cash. Fifth Third will not issue any fractional common shares in the merger. Instead, a holder of MB Financial common stock who otherwise would have received a fraction of a Fifth Third common share will receive an amount in cash (rounded to the nearest cent) determined by multiplying (i) the fraction of a Fifth Third common share to which the holder would otherwise be entitled by (ii) the average closing price of Fifth Third common stock on the NASDAQ Global Select Market (which we refer to as the “NASDAQ”) for the five full trading days ending on the trading day immediately preceding the closing date of the merger.

Although the merger consideration is fixed, the value of the stock portion of the merger consideration will fluctuate between the date of this proxy statement/prospectus and the completion of the merger based upon the market value of Fifth Third common stock. Any fluctuation in the market price of Fifth Third common stock after the date of this proxy statement/prospectus will change the value of the shares of Fifth Third common stock that MB Financial common stockholders will receive in the merger.

 

Q:

WHAT WILL MB FINANCIAL PREFERRED STOCKHOLDERS RECEIVE IN THE MERGER?

 

A:

If the merger is completed as the direct merger, which will be the case if the direct merger is approved by the holders of MB Financial preferred stock, each share of MB Financial preferred stock will be converted into the right to receive one share of new Fifth Third preferred stock, and the depositary shares, each representing a 1/40th interest in a share of MB Financial preferred stock, will be converted into depositary shares, each representing a 1/40th interest in a share of new Fifth Third preferred stock.

If the merger is completed as the alternative merger, which will be the case if the direct merger is not approved by the holders of MB Financial preferred stock and the alternative merger and charter amendment are approved by the holders of MB Financial common stock, the MB Financial preferred stock will not be converted into a share of new Fifth Third preferred stock and will instead remain outstanding and unchanged (except as modified by the proposed charter amendment referred to below) as preferred stock of MB Financial, which will be a subsidiary of Fifth Third. Approval of the common stockholder merger proposal described below under “What are MB Financial stockholders being asked to vote on?” constitutes approval of both the direct merger and the alternative merger by the holders of MB Financial common stock.

 

Q:

WILL THE MB FINANCIAL COMMON STOCK AND DEPOSITARY SHARES REPRESENTING INTERESTS IN MB FINANCIAL PREFERRED STOCK CONTINUE TO BE LISTED ON THE NASDAQ FOLLOWING COMPLETION OF THE MERGER?

 

A:

No. Upon completion of the merger, MB Financial common stock and the depositary shares, each representing a 1/40th interest in a share of MB Financial preferred stock, will be delisted from the NASDAQ and thereafter will be deregistered under the Exchange Act and MB Financial will no longer be required to file periodic reports with the SEC with respect to the MB Financial common stock and the depositary shares. The Fifth Third common shares issuable in the merger will be listed on the NASDAQ. Prior to the effective time of the direct merger, Fifth Third will use its reasonable best efforts to cause the new Fifth Third preferred stock, if issuable, (or depositary shares representing interests in the new Fifth Third preferred stock) to be approved for listing on the NASDAQ.

 

Q:

WHEN WILL THE MERGER BE COMPLETED?

 

A:

The parties currently expect that the merger will be completed in the first quarter of 2019. However, neither Fifth Third nor MB Financial can assure you of when or if the merger will be completed, and it is possible that factors outside of the control of both companies, including whether and when the required regulatory approvals will be received, could result in the merger being completed at a different time or not at all. MB Financial must first obtain required stockholder approvals, and Fifth Third and MB Financial must also first

 

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  obtain certain necessary regulatory approvals and satisfy other closing conditions. See “The Merger Agreement—Conditions to the Merger” beginning on page 95.

 

Q:

WHAT ARE MB FINANCIAL STOCKHOLDERS BEING ASKED TO VOTE ON?

 

A:

Holders of MB Financial preferred stock are being asked to vote on the following proposals:

 

  1.

to approve the direct merger (which we refer to as the “preferred stockholder merger proposal”); and

 

  2.

to approve one or more adjournments of the special meeting, if necessary or appropriate to permit further solicitation of proxies from the holders of MB Financial preferred stock in favor of the preferred stockholder merger proposal (which we refer to as the “preferred stockholder adjournment proposal”).

Computershare Inc. and Computershare Trust Company N.A. (which we refer to collectively as the “depositary”), holds of record all of the outstanding shares of MB Financial preferred stock on behalf of the holders of depositary shares, each representing a 1/40th interest in a share of MB Financial preferred stock. The depositary is required to vote the MB Financial preferred stock in accordance with the instructions of the holders of the depositary shares. Where we refer to “holders of MB Financial preferred stock” or “MB Financial preferred stockholders,” this includes holders of the depositary shares representing interests in MB Financial preferred stock unless the context indicates otherwise.

Holders of MB Financial common stock are being asked to vote on the following proposals:

 

  1.

to approve the merger (whether effected as the direct merger or, in the event the preferred stockholders do not approve the preferred stockholder merger proposal, as the alternative merger) (which we refer to as the “common stockholder merger proposal”);

 

  2.

to approve an amendment to the charter of MB Financial and the articles supplementary to the charter of MB Financial relating to the MB Financial preferred stock that would give the holders of MB Financial preferred stock the right to vote with the holders of MB Financial common stock as a single class on all matters submitted to a vote of such common stockholders, to become effective immediately prior to consummation of the alternative merger in the event the holders of MB Financial preferred stock do not approve the preferred stockholder merger proposal (which we refer to as the “charter amendment proposal”);

 

  3.

to approve, on a non-binding, advisory basis, the compensation to be paid to MB Financial’s named executive officers that is based on or otherwise relates to the merger, discussed under the section entitled “The Merger—Interests of MB Financial Directors and Executive Officers in the Merger” beginning on page 70 (which we refer to as the “merger-related compensation proposal”); and

 

  4.

to approve one or more adjournments of the special meeting, if necessary or appropriate to permit further solicitation of proxies from the holders of MB Financial common stock in favor of the common stockholder merger proposal and/or the charter amendment proposal (which we refer to as the “common stockholder adjournment proposal”).

The merger cannot be completed unless MB Financial common stockholders approve the common stockholder merger proposal and, if the MB Financial preferred stockholders fail to approve the preferred stockholder merger proposal, the charter amendment proposal. Therefore, it is essential that MB Financial common stockholders approve both the common stockholder merger proposal and the charter amendment proposal to ensure the merger can be completed in the event the MB Financial preferred stockholders fail to approve the preferred stockholder merger proposal.

 

Q:

WHAT IS THE CHARTER AMENDMENT PROPOSAL AND WHY ARE MB FINANCIAL COMMON STOCKHOLDERS BEING ASKED TO APPROVE IT?

 

A:

As indicated above, the charter amendment would amend the charter of MB Financial (specifically, Section C of Article 5 of the charter) and the articles supplementary to the charter of MB Financial relating to the

 

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  MB Financial preferred stock (specifically, Sections 6(a) and 6(d) of Annex A to the articles supplementary) to give the holders of MB Financial preferred stock the right to vote with the holders of MB Financial common stock as a single class on all matters submitted to a vote of such common stockholders, with the holders of MB Financial preferred stock being entitled to 24 votes for each share of MB Financial preferred stock. If approved by the MB Financial common stockholders, the charter amendment will not become effective until immediately prior to consummation of the alternative merger, following the filing of articles of amendment with the Department of Assessments and Taxation of the State of Maryland. As noted above, the alternative merger will occur instead of the direct merger if and only if the MB Financial preferred stockholders fail to approve the preferred stockholder merger proposal and the MB Financial common stockholders approve the common stockholder merger proposal and the charter amendment proposal. Approval of the charter amendment proposal is necessary to obtain required tax opinions in the event the alternative merger will occur instead of the direct merger.

Upon completion of the alternative merger, MB Financial will be a subsidiary of Fifth Third, who will control MB Financial. MB Financial preferred stockholders will vote with Fifth Third as a single class on all matters submitted to a vote of Fifth Third, as the sole common stockholder of MB Financial following completion of the alternative merger. Thus, the voting rights that would be conferred upon the MB Financial preferred stockholders by the charter amendment would continue to apply with respect to MB Financial, and not Fifth Third, following completion of the alternative merger.

 

Q:

WHAT CONSTITUTES A QUORUM AT THE SPECIAL MEETING?

 

A:

The holders of a majority of the outstanding shares of MB Financial common stock as of August 1, 2018 (which we refer to as the “record date”), present in person or represented by proxy, will constitute a quorum for purposes of the matters being voted on by the common stockholders. The holders of a majority of the outstanding shares of MB Financial preferred stock, as of the record date, present in person or represented by proxy, will constitute a quorum for purposes of the matters being voted on by the preferred stockholders.

 

Q:

WHAT VOTE IS REQUIRED TO APPROVE EACH PROPOSAL AT THE SPECIAL MEETING?

 

A:

Preferred Stockholder Merger Proposal: The affirmative vote of the holders of at least two-thirds of the outstanding shares of MB Financial preferred stock as of the record date is required to approve the preferred stockholder merger proposal.

Common Stockholder Merger Proposal: The affirmative vote of the holders of a majority of the outstanding shares of MB Financial common stock as of the record date and entitled to vote thereon is required to approve the common stockholder merger proposal.

Charter Amendment Proposal: The affirmative vote of the holders of a majority of the outstanding shares of MB Financial common stock as of the record date and entitled to vote thereon is required to approve the charter amendment proposal.

Merger-Related Compensation Proposal: The affirmative vote of a majority of the votes cast by the holders of MB Financial common stock on the merger-related compensation proposal is required to approve the merger-related compensation proposal. The merger-related compensation proposal is an advisory vote, and therefore is not binding on MB Financial or on Fifth Third or the Boards of Directors or the compensation committees of MB Financial or Fifth Third. Since compensation and benefits to be paid or provided in connection with the merger are based on contractual arrangements with the named executive officers, the outcome of this advisory vote will not affect the obligation to make these payments. MB Financial is seeking this non-binding advisory stockholder approval pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and Rule 14a-21(c) under the Securities Exchange Act of 1934, as amended (which we refer to as the “Exchange Act”), which requires MB Financial to provide its common stockholders with the opportunity to vote to approve, on a non-binding, advisory basis, the compensation that may be paid or become payable to MB Financial’s named executive officers in connection with the

 

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merger. The merger-related compensation proposal gives MB Financial common stockholders the opportunity to express their views on the merger-related compensation of MB Financial’s named executive officers. MB Financial’s common stockholders are not required to approve the merger-related compensation proposal in order for the merger to occur. If MB Financial’s common stockholders fail to approve the merger-related compensation proposal, but approve the common stockholder merger proposal and, in the event the MB Financial preferred stockholders fail to approve the preferred stockholder merger proposal, the charter amendment proposal, the merger may nonetheless occur.

Preferred Stockholder Adjournment Proposal: The affirmative vote of a majority of the votes cast by the holders of MB Financial preferred stock on the preferred stockholder adjournment proposal is required to approve the preferred stockholder adjournment proposal.

Common Stockholder Adjournment Proposal: The affirmative vote of a majority of the votes cast by the holders of MB Financial common stock on the common stockholder adjournment proposal is required to approve the common stockholder adjournment proposal.

 

Q:

WHAT DO I NEED TO DO NOW?

 

A:

After carefully reading and considering the information contained in this proxy statement/prospectus, please vote your shares of MB Financial common stock or depositary shares representing interests in MB Financial preferred stock as soon as possible. Please follow the instructions set forth on the enclosed proxy card if you are the record holder of your shares or on the voting instruction form provided by your broker, bank or other nominee if your shares or depositary shares are held in the name of your broker, bank or other nominee.

 

Q:

HOW DO I VOTE?

 

A:

If, as of the record date, you hold shares of MB Financial common stock in your name as a stockholder of record, you may use one of the following voting methods:

 

   

use the toll-free number shown on your proxy card;

 

   

visit the website shown on your proxy card to vote via the Internet; or

 

   

complete, sign, date and return the enclosed proxy card in the enclosed postage-paid envelope.

If you are a holder of record of MB Financial common stock as of the record date, you may also cast your vote in person at the special meeting. While holders of depositary shares representing MB Financial preferred stock may attend the special meeting, they may not vote such depositary shares in person at the special meeting; such depositary shares may only be voted by providing voting instructions to the depositary, and the depositary will vote the shares of MB Financial preferred stock represented thereby in accordance with such instructions.

If your shares or depositary shares are held in “street name” through a broker, bank or other nominee, your broker, bank or other nominee will send you separate instructions describing the procedure for voting your shares or depositary shares. Please refer to the voting instruction form for the applicable deadline for voting your shares or depositary shares. Holders of MB Financial common stock in “street name” who wish to vote in person at the special meeting will need to obtain a proxy form from their broker, bank or other nominee.

 

Q:

HOW DOES THE MB FINANCIAL BOARD OF DIRECTORS RECOMMEND THAT I VOTE?

 

A:

The MB Financial Board of Directors recommends that holders of MB Financial common stock vote “FOR” the common stockholder merger proposal, “FOR” the charter amendment proposal, “FOR” the merger-related compensation proposal and “FOR” the common stockholder adjournment proposal (if necessary or appropriate), and recommends that holders of MB Financial preferred stock vote “FOR” the preferred stockholder merger proposal and “FOR” the preferred stockholder adjournment proposal (if necessary or appropriate).

 

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Q:

WHEN AND WHERE IS THE SPECIAL MEETING?

 

A:

The special meeting of MB Financial stockholders will be held on September 18, 2018, at 8:30 a.m. local time, at 6111 North River Road, Rosemont, Illinois 60018.

 

Q:

IF MY SHARES OR DEPOSITARY SHARES ARE HELD IN “STREET NAME” BY A BROKER, BANK OR OTHER NOMINEE, WILL MY BROKER, BANK OR OTHER NOMINEE VOTE MY SHARES OR DEPOSITARY SHARES FOR ME?

 

A:

If you hold shares of MB Financial common stock, or depositary shares representing interests in MB Financial preferred stock, in “street name” through a broker, bank or other holder of record, you must provide the record holder of your shares or depositary shares with instructions on how to vote your shares or depositary shares. Please follow the voting instructions provided by the broker or bank. You may not vote shares held in street name by returning a proxy card directly to MB Financial or by voting in person at the special meeting unless you provide a “legal proxy,” which you must obtain from your broker, bank or other nominee. Further, brokers, banks or other nominees who hold shares of MB Financial stock on behalf of their customers may not give a proxy to MB Financial to vote those shares with respect to any of the proposals without specific instructions from their customers, as brokers, banks and other nominees do not have discretionary voting power on these matters. Therefore, if you hold shares of MB Financial common stock, or depositary shares representing interests in MB Financial preferred stock, in street name and do not instruct your broker, bank or other nominee on how to vote your shares or depositary shares, your broker, bank or other nominee will not vote your shares or depositary shares on any proposal on which you are entitled to vote. In the case of the preferred stockholder merger proposal, the common stockholder merger proposal or the charter amendment proposal, this will have the same effect as a vote cast “AGAINST” the proposal. In the case of the merger-related compensation proposal, the common stockholder adjournment proposal or the preferred stockholder adjournment proposal, this will have no effect on the proposal.

 

Q:

WHAT IF I HOLD SHARES OF MB FINANCIAL COMMON STOCK THROUGH THE MB FINANCIAL 401(k) PROFIT SHARING PLAN?

 

A:

If you hold shares of MB Financial common stock through the MB Financial 401(k) profit sharing plan, you are entitled to instruct the plan trustee on how to vote the shares allocated to your plan account. Plan shares for which voting instructions are not received, or are not timely received, by the plan trustee will be voted in the same proportion as the shares for which timely voting instructions are received by the plan trustee. Refer to the voting instructions form for your plan shares for additional information, including the deadline for submitting your voting instructions.

 

Q:

WHAT IF I ATTEND THE SPECIAL MEETING AND ABSTAIN OR DO NOT VOTE?

 

A:

For purposes of the special meeting, an abstention occurs when an MB Financial stockholder attends the MB Financial special meeting, either in person or by proxy, but abstains from voting.

 

   

For the preferred stockholder merger proposal, the common stockholder merger proposal and the charter amendment proposal, an abstention or failure to vote will have the same effect as a vote cast “AGAINST” such proposals.

 

   

For the merger-related compensation proposal, the common stockholder adjournment proposal and the preferred stockholder adjournment proposal, an abstention or failure to vote will have no effect on the outcome of the vote. For each of these proposals, abstentions are not treated as votes cast and will have no effect on the outcome of the vote, though abstentions are counted towards establishing a quorum.

 

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Q:

WHAT WILL HAPPEN IF I RETURN MY PROXY CARD WITHOUT INDICATING HOW TO VOTE?

 

A:

If you are a holder of record of MB Financial common stock and sign and return your proxy card without indicating how to vote on any particular proposal, the shares represented by your proxy will be voted as recommended by the MB Financial Board of Directors with respect to that proposal.

 

Q:

MAY I CHANGE MY VOTE AFTER I HAVE DELIVERED MY PROXY CARD?

 

A:

If you are a holder of record of MB Financial common stock and have submitted your proxy and would like to revoke your proxy, you may do so before your shares are voted at the special meeting by: (i) filing a notice with the Corporate Secretary of MB Financial revoking your proxy, (ii) filing a new, subsequently dated proxy card (whether by proxy card, online or by telephone) or (iii) by attending the special meeting and voting your shares in person. Your presence at the special meeting alone will not revoke your proxy. If you have instructed a broker, bank or other nominee to vote your shares or depositary shares, you must follow the directions you receive from your broker, bank or other nominee in order to change or revoke your vote.

Unless so revoked, the shares and depositary shares represented by such proxies and voting instructions will be voted at the special meeting and all adjournments or postponements of the special meeting.

 

Q:

ARE MB FINANCIAL STOCKHOLDERS ENTITLED TO APPRAISAL RIGHTS?

 

A:

No, MB Financial common stockholders and MB Financial preferred stockholders are not entitled to appraisal rights under the Maryland General Corporation Law.

 

Q:

WHAT ARE THE MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER TO MB FINANCIAL STOCKHOLDERS?

The obligation of Fifth Third and MB Financial to complete the merger is conditioned upon the receipt of legal opinions from their respective counsel to the effect that the merger will qualify as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code.

If the merger qualifies as a reorganization for United States federal income tax purposes, (1) U.S. holders of MB Financial common stock who receive a combination of Fifth Third common shares and cash, other than cash instead of a fractional Fifth Third common share, in exchange for their MB Financial common stock, will recognize gain (but not loss) in an amount equal to the lesser of (x) the amount by which the sum of the fair market value of the Fifth Third common shares and cash (other than cash received instead of a fractional Fifth Third common share) received by such holder in exchange for its shares of MB Financial common stock exceeds the holder’s adjusted basis in its shares of MB Financial common stock, and (y) the amount of cash (other than cash received instead of fractional Fifth Third common shares) received by such holder in exchange for its shares of MB Financial common stock; and (2) U.S. holders of MB Financial preferred stock who either receive solely new Fifth Third preferred stock in the merger or who will not convert their shares into Fifth Third preferred stock pursuant to the alternative merger and will remain holders of MB Financial preferred stock (including the receipt of voting rights prior to the alternative merger) will not recognize any gain or loss. Generally, any gain recognized upon the exchange will be capital gain, and any such capital gain will be long-term capital gain if the holding period for such shares of MB Financial common stock is more than one year. Depending on certain facts specific to you, gain could instead be characterized as ordinary dividend income.

For a more detailed discussion of the material United States federal income tax consequences of the transaction, see “Material United States Federal Income Tax Consequences of the Merger” beginning on page 99.

 

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The consequences of such merger to any particular stockholder will depend on that stockholder’s particular facts and circumstances. Accordingly, you are urged to consult your tax advisor to determine your tax consequences from the merger.

 

Q:

WHAT HAPPENS IF THE MERGER IS NOT COMPLETED?

 

A:

If the merger is not completed, MB Financial stockholders will not receive any consideration for their shares of MB Financial common stock and will not receive shares of new Fifth Third preferred stock for their shares of MB Financial preferred stock in connection with the merger. Instead, MB Financial will remain an independent public company and its common stock and the depositary shares representing interests in its preferred stock will continue to be listed and traded on the NASDAQ. Under specified circumstances, MB Financial may be required to pay to Fifth Third a fee with respect to the termination of the merger agreement. See “The Merger Agreement—Termination; Termination Fee” beginning on page 96.

 

Q:

SHOULD MB FINANCIAL STOCKHOLDERS SEND IN THEIR STOCK CERTIFICATES NOW?

 

A:

No. MB Financial stockholders SHOULD NOT send in any stock certificates now. If the merger is approved, transmittal materials, with instructions for their completion, will be provided under separate cover to MB Financial stockholders who hold physical stock certificates and the stock certificates should be sent at that time in accordance with such instructions.

 

Q:

WHOM SHOULD I CONTACT IF I HAVE ANY QUESTIONS ABOUT THE PROXY MATERIALS OR VOTING?

 

A:

If you have any questions about the proxy materials or if you need assistance submitting your proxy or voting your shares or need additional copies of this proxy statement/prospectus or the enclosed proxy card, you should contact D.F. King, the proxy solicitation agent for MB Financial, toll-free at (800) 431-9645.

 

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SUMMARY

This summary highlights selected information included in this proxy statement/prospectus and does not contain all of the information that may be important to you. You should read this entire document and its appendices and the other documents to which we refer before you decide how to vote. In addition, we incorporate by reference important business and financial information about MB Financial and Fifth Third into this proxy statement/prospectus. See “Where You Can Find More Information” in the forepart of this proxy statement/prospectus and “Incorporation of Certain Documents by Reference” beginning on page 133. Each item in this summary includes a page reference directing you to a more complete description of that item.

The Merger and the Merger Agreement (page 84)

The terms and conditions of the merger are contained in the merger agreement, which is attached as Appendix A to this proxy statement/prospectus. We encourage you to read the merger agreement carefully, as it is the legal document that governs the merger.

If the direct merger is approved by MB Financial’s common stockholders and preferred stockholders and the direct merger is subsequently completed, MB Financial will merge with and into Intermediary, with Intermediary surviving the merger.

If the MB Financial preferred stockholders do not approve the direct merger, but the alternative merger and charter amendment are approved by the holders of MB Financial common stock, then the acquisition of MB Financial will instead be effected by the merger of a newly-formed subsidiary of Fifth Third with and into MB Financial, with MB Financial surviving the alternative merger. Only if the direct merger is not approved by the MB Financial preferred stockholders will the alternative merger occur instead of the direct merger, if the applicable common stockholder approvals for the alternative merger and charter amendment are obtained.

Merger Consideration (page 84)

Each share of MB Financial common stock issued and outstanding immediately prior to the effective time of the merger (other than shares owned by MB Financial or Fifth Third), will be converted into the right to receive 1.45 Fifth Third common shares (which we refer to as the “exchange ratio”) and $5.54 in cash.

In the direct merger, each share of MB Financial preferred stock issued and outstanding immediately prior to the effective time of the direct merger will automatically be converted into a share of new Fifth Third preferred stock with the terms as set forth on Appendix D. In the alternative merger, the MB Financial preferred stock will not be converted into a share of the new Fifth Third preferred stock and will instead remain outstanding and unchanged as preferred stock of MB Financial, which will be a subsidiary of Fifth Third, except that the holders of MB preferred stock will have the right to vote with the MB Financial common stockholders as a single class on all matters submitted to a vote of such common stockholders. Upon completion of the alternative merger, MB Financial will be a subsidiary of Fifth Third, who will control MB Financial. MB Financial preferred stockholders will vote with Fifth Third as a single class on all matters submitted to a vote of Fifth Third, as the sole common stockholder of MB Financial following completion of the alternative merger. Thus, the voting rights that would be conferred upon the MB Financial preferred stockholders by the charter amendment would continue to apply with respect to MB Financial, and not Fifth Third, following completion of the alternative merger.

At or promptly following the closing of the merger, Fifth Third expects to take the necessary steps to delist the depositary shares representing interests in MB Financial preferred stock from the NASDAQ and terminate MB Financial’s registration and reporting obligations with the SEC, so that MB Financial’s depositary shares will no longer trade on the NASDAQ or any other securities exchange and MB Financial will no longer file reports or other public disclosure with the SEC under the Exchange Act.



 

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The following table shows the closing sales prices of MB Financial common stock and Fifth Third common shares as reported on the NASDAQ on May 18, 2018, the last full trading day before the public announcement of the signing of the merger agreement and on August 1, 2018, the last practicable trading date before the date of this proxy statement/prospectus. This table also shows the implied value of the merger consideration per share of MB Financial common stock, calculated by multiplying the closing sales prices of Fifth Third common stock on those dates by the exchange ratio of 1.45 Fifth Third common shares per share of MB Financial common stock and then adding the cash consideration of $5.54. The value of the merger consideration that you will receive for each share of MB Financial common stock will depend on the price per share of Fifth Third common shares at the time you receive the Fifth Third common shares. Therefore, the value of the merger consideration may be different than its estimated value based on the current price of Fifth Third common shares or the price of Fifth Third common shares at the time of the special meeting.

 

     Fifth Third
Common
Stock
     MB Financial
Common
Stock
     Cash
Consideration
     Implied
Value of
One Share
of
MB Financial
Common
Stock
 

May 18, 2018

   $ 33.56      $ 43.65      $ 5.54      $ 54.20  

August 1, 2018

   $ 29.78      $ 48.60      $ 5.54      $ 48.72  

Recommendation of the MB Financial Board of Directors (page 54)

The MB Financial Board of Directors has determined that the merger agreement and the transactions contemplated by the merger agreement are advisable and in the best interests of MB Financial and its stockholders, and approved the merger agreement and the transactions contemplated thereby. The MB Financial Board of Directors recommends that holders of MB Financial common stock vote “FOR” the common stockholder merger proposal, “FOR” the charter amendment proposal, “FOR” the merger-related compensation proposal and “FOR” the common stockholder adjournment proposal (if necessary or appropriate), and recommends that holders of MB Financial preferred stock vote “FOR” the preferred stockholder merger proposal and “FOR” the preferred stockholder adjournment proposal (if necessary or appropriate). See “The Merger—Recommendation of the MB Financial Board of Directors and Reasons for the Merger,” beginning on page  54.

Opinion of MB Financial’s Financial Advisor (page 59)

At the May 20, 2018 meeting at which the MB Financial Board of Directors considered the merger agreement, Sandler O’Neill & Partners, L.P. (which we refer to as “Sandler O’Neill”), delivered to the MB Financial Board of Directors its oral opinion, which was subsequently confirmed in writing on May 20, 2018 that, as of such date, subject to procedures followed, assumptions made, matters considered and qualifications and limitations described in Sandler O’Neill’s opinion, the merger consideration was fair to holders of MB Financial common stock from a financial point of view.

The full text of Sandler O’Neill’s opinion is attached as Appendix B to this proxy statement/prospectus. The opinion outlines the procedures followed, assumptions made, matters considered and qualifications and limitations on the review undertaken by Sandler O’Neill in rendering its opinion.

Holders of MB Financial common stock are urged to read the entire opinion carefully in connection with their consideration of the proposed transaction.

Sandler O’Neill’s opinion speaks only as of the date of the opinion. The opinion was directed to the MB Financial Board of Directors and does not constitute a recommendation to any stockholder of MB



 

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Financial as to how such stockholder should vote at any meeting of stockholders called to consider and vote upon approval of the merger. Sandler O’Neill’s opinion was directed only to the fairness of the merger consideration to holders of MB Financial common stock from a financial point of view and did not address the underlying business decision of MB Financial to engage in the merger, the form or structure of the merger, the relative merits of the merger as compared to any other alternative transactions or business strategies that might exist for MB Financial or the effect of any other transaction in which MB Financial might engage.

For further information, please see the section entitled “The Merger—Opinion of MB Financial’s Financial Advisor” beginning on page 59.

MB Financial Special Meeting of Stockholders (page 35)

The special meeting of MB Financial stockholders will be held on September 18, 2018, at 8:30 a.m. local time, at MB Financial Center, 6111 North River Road, Rosemont, Illinois 60018.

The special meeting is being held for the following purposes:

 

   

for the holders of MB Financial preferred stock to approve the direct merger (which we refer to as the “preferred stockholder merger proposal”);

 

   

for the holders of MB Financial common stock to approve the merger (whether effected as the direct merger or, in the event the preferred stockholders do not approve the preferred stockholder merger proposal, as the alternative merger) (which we refer to as the “common stockholder merger proposal”);

 

   

for the holders of MB Financial common stock to approve an amendment to the charter of MB Financial and the articles supplementary to the charter of MB Financial relating to the MB Financial preferred stock that would give the holders of MB Financial preferred stock the right to vote with the holders of MB Financial common stock as a single class on all matters submitted to a vote of such common stockholders, to become effective immediately prior to the consummation of the alternative merger in the event the holders of MB Financial preferred stock do not approve the preferred stockholder merger proposal (which we refer to as the “charter amendment proposal”);

 

   

for the holders of MB Financial common stock to approve, on a non-binding, advisory basis, the compensation to be paid to MB Financial’s named executive officers that is based on or otherwise relates to the merger, discussed under the section entitled “The Merger—Interests of MB Financial Directors and Executive Officers in the Merger” beginning on page 70 (which we refer to as the “merger-related compensation proposal”);

 

   

for the holders of MB Financial preferred stock to approve one or more adjournments of the special meeting, if necessary or appropriate to permit further solicitation of proxies from the holders of MB Financial preferred stock in favor of the preferred stockholder merger proposal (which we refer to as the “preferred stockholder adjournment proposal”); and

 

   

for the holders of MB Financial common stock to approve one or more adjournments of the special meeting, if necessary or appropriate to permit further solicitation of proxies from the holders of MB Financial common stock in favor of the common stockholder merger proposal and/or the charter amendment proposal (which we refer to as the “common stockholder adjournment proposal).

The MB Financial Board of Directors has fixed the close of business on August 1, 2018 as the record date for determining the holders of MB Financial common stock and the holders of MB Financial preferred stock entitled to receive notice of and to vote at the special meeting.



 

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As of the record date, there were 84,420,704 shares of MB Financial common stock outstanding and entitled to vote at the MB Financial special meeting held by 1,366 holders of record. Each share of MB Financial common stock entitles the holder thereof as of the record date to one vote at the special meeting on each proposal to be considered at the special meeting by the common stockholders, provided, however, that pursuant to Section F of Article 5 of MB Financial’s charter, no person who beneficially owns more than 14.9% of the shares of MB Financial common stock outstanding as of the record date may vote shares in excess of this limit.

As of the record date, there were 200,000 shares of MB Financial preferred stock outstanding, all of which were held by Computershare Inc. and Computershare Trust Company N.A. (which we refer to collectively as the “depositary”), on behalf of the holders of depositary shares each representing a 1/40th interest in a share of MB Financial preferred stock. Under the terms of the deposit agreement among MB Financial, the depositary and the holders from time to time of the depositary receipts evidencing the depositary shares, the depositary is required to vote the MB Financial preferred stock in accordance with the instructions of the holders of the depositary shares. Where we refer to “holders of MB Financial preferred stock” or “MB Financial preferred stockholders,” this includes holders of the depositary shares unless the context indicates otherwise.

As of the record date, the directors and executive officers of MB Financial and their affiliates beneficially owned and were entitled to vote 1,866,405 shares of MB Financial common stock, representing approximately 2.2% of the shares of MB Financial common stock outstanding on that date. MB Financial currently expects that its directors and executive officers will vote their shares of MB Financial common stock in favor of the common stockholder merger proposal, the charter amendment proposal, the merger-related compensation proposal and the common stockholder adjournment proposal (if necessary or appropriate), although none of them has entered into any agreements obligating them to do so. As of the record date, none of the directors and executive officers of MB Financial and their affiliates beneficially owned any depositary shares representing interests in MB Financial preferred stock. As of the record date, excluding shares held in a fiduciary or agency capacity, neither Fifth Third nor any of its directors and executive officers and their affiliates beneficially owned any shares of MB Financial common stock or depositary shares representing interests in MB Financial preferred stock.

The holders of a majority of the outstanding shares of MB Financial common stock, present in person or represented by proxy, will constitute a quorum for purposes of the matters being voted upon by the common stockholders. The holders of a majority of the outstanding shares of MB Financial preferred stock, present in person or represented by proxy, will constitute a quorum for purposes of the matters being voted upon by the preferred stockholders.

The affirmative vote of the holders of at least two-thirds of the outstanding shares of MB Financial preferred stock is required to approve the preferred stockholder merger proposal. The affirmative vote of the holders of a majority of the outstanding shares of MB Financial common stock entitled to vote thereon is required to approve each of the common stockholder merger proposal and the charter amendment proposal. The affirmative vote of a majority of the votes cast by the holders of MB Financial common stock is required to approve, on a non-binding, advisory basis, the merger-related compensation proposal and the common stockholder adjournment proposal. The affirmative vote of a majority of the votes cast by the holders of MB Financial preferred stock is required to approve the preferred stockholder adjournment proposal.

The merger cannot be completed unless MB Financial common stockholders approve the common stockholder merger proposal and, if the MB Financial preferred stockholders fail to approve the preferred stockholder merger proposal, the charter amendment proposal. Therefore, it is essential that MB Financial common stockholders approve both the common stockholder merger proposal and the charter amendment proposal to ensure the merger can be completed in the event the MB Financial preferred stockholders fail to approve the preferred stockholder merger proposal. If MB Financial’s common stockholders fail to approve the merger-related compensation proposal or the common stockholder adjournment proposal, or if MB Financial’s preferred



 

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stockholders fail to approve the preferred stockholder adjournment proposal, the merger may nonetheless occur provided that MB Financial’s common stockholders approve the common stockholder merger proposal and, in the event the MB Financial preferred stockholders fail to approve the preferred stockholder merger proposal, the charter amendment proposal.

MB Financial’s Directors and Executive Officers Have Financial Interests in the Merger (page 70)

Certain of MB Financial’s executive officers and directors have financial interests in the merger that are different from, or in addition to, the interests of MB Financial’s stockholders. The members of the MB Financial Board of Directors were aware of and considered these interests, among other matters, when they approved the merger agreement and recommended that MB Financial preferred stockholders approve the preferred stockholder merger proposal and that MB Financial common stockholders approve the common stockholder merger proposal and the charter amendment proposal. See “The MergerInterests of MB Financial Directors and Executive Officers in the Merger” beginning on page 70.

Treatment of MB Financial Stock Options and Other Equity Awards (page 85)

In connection with the merger, each outstanding equity-based award granted under the equity incentive plans of MB Financial will either be assumed by Fifth Third or, to the extent not assumed, converted into the right to receive merger consideration. Specifically, all outstanding options to purchase shares of MB Financial common stock, as well as all restricted stock awards, restricted stock unit awards and performance share unit awards, in each case, that do not automatically vest by the terms of such award, will be assumed by Fifth Third, and adjusted as follows.

Treatment of MB Financial Stock Option Awards. Assumed options will be adjusted so as to represent the right to acquire a number of Fifth Third common shares (rounded down to the nearest whole share) equal to the product of (i) the number of shares of MB Financial common stock subject to such assumed option immediately prior to the effective time multiplied by (ii) the sum of (a) the exchange ratio and (b) $5.54 divided by the average of the closing-sale prices of Fifth Third common shares on the NASDAQ as reported by The Wall Street Journal for the five full trading days ending the trading day immediately preceding the closing date (we refer to such sum as the “Fifth Third equity award exchange ratio”), at an exercise price per Fifth Third common share (rounded up to the nearest whole cent) equal to the quotient obtained by dividing (x) the exercise price per share of MB Financial common stock of such MB Financial stock option by (y) the Fifth Third equity award exchange ratio. The assumed options will otherwise remain subject to the same terms and conditions (including, without limitation, vesting conditions) as were applicable to such option prior to assumption.

Treatment of MB Financial Restricted Stock Awards, Restricted Stock Unit Awards, and Performance Share Unit Awards. Assumed restricted stock awards, restricted stock unit awards, and performance share unit awards will be adjusted so that the holder of such award will be entitled to receive, upon vesting, a number of Fifth Third common shares based upon the product of (a) the number of shares of MB Financial common stock underlying such award multiplied by (b) the Fifth Third equity award exchange ratio, rounded, as applicable, to the nearest whole share (with 0.50 being rounded upward). The assumed restricted stock awards, restricted stock unit awards, and performance share unit awards shall otherwise be subject to the same terms and conditions (including, without limitation, vesting conditions and cash dividend equivalents), as were applicable to such awards prior to the assumption.

Treatment of Other MB Financial Equity Awards. Each MB Financial equity-based award that is not assumed and adjusted under the merger agreement (in accordance with the terms set forth above) will be cancelled and converted automatically into the right to receive merger consideration.



 

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Treatment of MB Financial’s Stock Deferred Compensation Plan. Each share of MB Financial common stock outstanding under the MB Financial Stock Deferred Compensation Plan will be deemed cancelled and converted into the right to receive the merger consideration; payment of such amount will otherwise remain subject to the terms and conditions of such plan.

Regulatory Approvals Required for the Merger (page 79)

Completion of the merger is subject to various regulatory approvals, including approval from the Board of Governors of the Federal Reserve System (which we refer to as the “Federal Reserve Board”). Notifications and/or applications requesting approval for the merger, or other transactions contemplated by the merger agreement, may also be submitted to other federal and state regulatory authorities and self-regulatory organizations. Fifth Third and MB Financial have agreed to use their reasonable best efforts to obtain all required regulatory approvals. We have filed, or are in the process of filing, notices and applications to obtain the necessary regulatory approvals. Although we currently believe we should be able to obtain all required regulatory approvals in a timely manner, we cannot be certain when or if we will obtain them or, if obtained, whether they will contain terms, conditions or restrictions not currently contemplated that will be detrimental to Fifth Third or its subsidiaries after the completion of the merger, or will contain any condition or restriction that would reasonably be expected to have a material adverse effect on Fifth Third and its subsidiaries, taken as a whole, after giving effect to the merger (measured on a scale relative to MB Financial and its subsidiaries, taken as a whole) (which we refer to as a “materially burdensome regulatory condition”). The regulatory approvals to which completion of the merger are subject are described in more detail in the section of this proxy statement/prospectus entitled “Regulatory Approvals Required for the Merger” beginning on page 79.

Appraisal Rights (page 126)

Under the Maryland General Corporation Law, the holders of MB Financial common stock and preferred stock will not have any appraisal rights with respect to the merger. For more information, please see “The Merger—Conversion of Shares; Exchange and Payment Procedures—Dissenting Shares”.

Conditions to the Merger (page 95)

The obligations of Fifth Third and MB Financial to complete the merger are each subject to the satisfaction (or waiver, if permitted) of the following conditions:

 

   

receipt of the requisite approval of the MB Financial common stockholders of the merger and the charter amendment;

 

   

approval for the listing on the NASDAQ of the Fifth Third common shares to be issued in connection with the merger;

 

   

the effectiveness of the registration statement on Form S-4, of which this proxy statement/prospectus is a part, and the absence of a stop order or proceeding initiated or threatened by the SEC for that purpose;

 

   

the receipt of all required regulatory approvals which are necessary to consummate the transactions contemplated by the merger agreement and the expiration of all statutory waiting periods without the imposition of a materially burdensome regulatory condition;

 

   

the absence of any order, injunction, decree, statute, rule, regulation or other legal restraint or prohibition preventing the consummation of, or which prohibits or makes illegal the consummation of, the transactions contemplated by the merger agreement;



 

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the accuracy of the other party’s representations and warranties as of the date of the merger agreement and as of the closing date of the merger, other than, in most cases, those failures to be true and correct that would not reasonably be likely to have a material adverse effect on the other party;

 

   

the prior performance in all material respects by the other party of the obligations required to be performed by it at or prior to the closing date of the merger; and

 

   

receipt by each party of an opinion from its counsel as to certain tax matters.

No Solicitation (page 91)

Under the terms of the merger agreement, MB Financial has agreed not to initiate, solicit, knowingly encourage or knowingly facilitate inquiries or proposals with respect to, or engage or participate in any negotiations concerning, or provide any confidential or nonpublic information or data to, or have or participate in any discussions with any person relating to, or enter into any binding acquisition agreement, merger agreement or other definitive transaction agreement (other than a confidentiality agreement described in this paragraph) relating to, any acquisition proposal. Notwithstanding these restrictions, the merger agreement provides that, under specified circumstances, in response to an unsolicited bona fide written acquisition proposal which, in the good faith judgment of the MB Financial Board of Directors (after receiving the advice of its outside counsel and financial advisors), is or is more likely than not to result in a proposal which is superior to the merger with Fifth Third, if the MB Financial Board of Directors determines in good faith (after receiving the advice of its outside counsel and financial advisors) that failure to take such actions would more likely than not result in a violation of its fiduciary duties under applicable law, MB Financial may furnish nonpublic information or data regarding MB Financial and participate in discussions or negotiations with such third party, provided that prior to providing any such nonpublic information or data, MB Financial will have provided such information to Fifth Third and entered into a confidentiality agreement with such third party on terms no less favorable to it than the confidentiality agreement between MB Financial and Fifth Third, which confidentiality agreement will not provide such third party with any exclusive right to negotiate with MB Financial.

Termination; Termination Fee (page 96)

The merger agreement may be terminated at any time prior to the effective time of the merger, whether before or after approval of the merger by MB Financial’s stockholders:

 

   

by mutual written consent of Fifth Third and MB Financial;

 

   

by either Fifth Third or MB Financial, if a required regulatory approval is denied by final, non-appealable action, or if a governmental entity has issued a final, non-appealable order permanently enjoining or otherwise prohibiting or making illegal the closing of the transactions contemplated by the merger agreement, unless the failure to obtain a required regulatory approval is due to the failure of the party seeking to terminate the merger agreement to perform or observe the covenants and agreements of such party set forth in the agreement;

 

   

by either Fifth Third or MB Financial, if the merger has not closed by the close of business on May 20, 2019 (which we refer to as the “termination date”), unless the failure to close by the termination date is due to the failure of the party seeking to terminate the merger agreement to perform or observe the covenants and agreements of such party set forth in the agreement, provided that if on the termination date all other closing conditions are satisfied other than receipt of required regulatory approvals, then the termination date may be extended for three months at the option of either Fifth Third or MB Financial;

 

   

by either Fifth Third or MB Financial, if there is a breach by the other party that would, individually or in the aggregate with other breaches by such party, result in the failure of a closing condition, unless



 

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the breach is cured by the earlier of the termination date and 45 days following written notice of the breach (provided that the terminating party is not then in material breach of the merger agreement); or

 

   

by Fifth Third, if, (i) prior to the approval by the MB Financial common stockholders of the merger and charter amendment, which we refer to as the “MB Financial stockholder matters”, the MB Financial Board of Directors (A) submits the MB Financial stockholder matters to its stockholders without a recommendation for approval, or otherwise withdraws or materially and adversely modifies its recommendation for approval (or publicly discloses an intention to do so), or recommends to its stockholders an acquisition proposal other than the merger, or (B) materially breaches its obligation to call a stockholder meeting and recommend to its stockholders, in accordance with the terms of the merger agreement, the approval of the MB Financial stockholder matters or to refrain from soliciting alternative acquisition proposals or (ii) a tender offer or exchange offer for 25% or more of MB Financial’s outstanding shares of common stock is commenced (other than by Fifth Third or its subsidiaries) and the MB Financial Board of Directors recommends that MB Financial’s stockholders tender or exchange their shares (or fails to recommend a rejection of such tender or exchange offer within ten business days).

MB Financial may be required to pay Fifth Third a termination fee of $151.2 million in certain circumstances. See “The Merger Agreement—Termination; Termination Fee” beginning on page 96.

The Rights of MB Financial Stockholders Will Change as a Result of the Merger (page 104)

The rights of MB Financial stockholders will change as a result of the merger. The rights of MB Financial stockholders are governed by Maryland law and by MB Financial’s charter and bylaws. Upon completion of the merger, MB Financial common stockholders will become common shareholders of Fifth Third, and their rights will be governed by Ohio law and Fifth Third’s articles of incorporation and code of regulations. For more information, see “Comparison of Stockholders’ Rights” beginning on page 104.

If the merger is completed through the direct merger, which will be the case if the preferred stockholder merger proposal is approved by the holders of MB Financial preferred stock and the common stockholder merger proposal is approved by the holders of MB Financial common stock, each share of MB Financial preferred stock will be converted into the right to receive one share of new Fifth Third preferred stock. The new Fifth Third preferred stock will have substantially the same terms as the MB Financial preferred stock, except that the Fifth Third preferred stock will have no voting rights (including upon an arrearage in the payment of dividends) except as required by Ohio law and will have certain other differences consistent with Fifth Third’s currently outstanding series of preferred stock and its articles of incorporation. For more information, see “Description of Fifth Third Capital Stock” beginning on page 118.

If the merger is completed through the alternative merger, which will be the case if the preferred stockholder merger proposal is not approved by the holders of MB Financial preferred stock and the holders of MB Financial common stock approve both the common stockholder merger proposal and the charter amendment proposal, the MB Financial preferred stock will not be converted into a share of new Fifth Third preferred stock and will instead remain outstanding and unchanged (except as modified by the charter amendment) as preferred stock of MB Financial, which will be a subsidiary of Fifth Third. Upon completion of the alternative merger, Fifth Third will control MB Financial. MB Financial preferred stockholders will vote with Fifth Third as a single class on all matters submitted to a vote of Fifth Third, as the sole common stockholder of MB Financial following completion of the alternative merger. Thus, the voting rights that would be conferred upon the MB Financial preferred stockholders by the charter amendment would continue to apply with respect to MB Financial, and not Fifth Third, following completion of the alternative merger.



 

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Risk Factors (page 27)

You should consider all the information contained in or incorporated by reference into this proxy statement/prospectus in deciding how to vote for the proposals presented in the proxy statement/prospectus. In particular, you should consider the factors described under “Risk Factors” beginning on page 27.

The Parties (page 44)

Fifth Third Bancorp

38 Fountain Square Plaza

Cincinnati, Ohio 45263

Phone: (800) 972-3030

Fifth Third is an Ohio corporation that is registered as a bank holding company under the Bank Holding Company Act of 1956, as amended. Fifth Third was organized in 1975 and serves as the parent holding company for Fifth Third Bank (which we refer to as “Fifth Third Bank”), its principal subsidiary, through which it provides most of its banking services. As of March 31, 2018, Fifth Third had total assets of $142 billion. Fifth Third and its subsidiaries had 18,125 full-time equivalent employees as of December 31, 2017.

Fifth Third Financial Corporation

38 Fountain Square Plaza

Cincinnati, Ohio 45263

Phone: (800) 972-3030

Intermediary is an Ohio corporation and a wholly-owned subsidiary of Fifth Third. Intermediary was incorporated in 2001 and serves as the intermediary holding company for all of Fifth Third’s subsidiaries, including Fifth Third Bank, its principal subsidiary.

MB Financial, Inc.

800 West Madison Street

Chicago, Illinois 60607

Phone: (888) 422-6562

MB Financial is a Maryland corporation and a financial holding company and a bank holding company under the Bank Holding Company Act of 1956, as amended. Its primary market is the Chicago metropolitan area. Through its bank subsidiary, MB Financial Bank, N.A. (which we sometimes refer to as “MB Financial Bank”), it offers a broad range of financial services, primarily to small and middle market businesses and individuals in the markets that it serves. As of March 31, 2018, on a consolidated basis, MB Financial had total assets of $20.2 billion, total deposits of $15.0 billion and stockholders’ equity of $2.9 billion.



 

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SELECTED HISTORICAL FINANCIAL DATA FOR MB FINANCIAL

The following table summarizes financial results achieved by MB Financial, Inc. for the periods and at the dates indicated and should be read in conjunction with MB Financial’s consolidated financial statements and the notes to the consolidated financial statements contained in reports that MB Financial has previously filed with the SEC. Historical financial information for MB Financial can be found in its Quarterly Report on Form 10-Q for the quarter ended March 31, 2018 and its Annual Report on Form 10-K for the year ended December 31, 2017. See “Where You Can Find More Information” in the forepart of this proxy statement/prospectus for instructions on how to obtain the information that has been incorporated by reference into this proxy statement/prospectus. Financial amounts as of and for the three months ended March 31, 2018 and 2017 are unaudited (and are not necessarily indicative of the results of operations for the full year or any other interim period), but management of MB Financial believes that such amounts reflect all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of its results of operations and financial position as of the dates and for the periods indicated. You should not assume the results of operations for past periods and for the three months ended March 31, 2018 and 2017 indicate results for any future period.

 

    Three months ended
March 31,
    Years ended December 31,  

(dollars in millions, except per share data)

      2018             2017         2017     2016     2015     2014     2013  
    (unaudited)                                

RESULTS OF OPERATIONS—FOR THE PERIOD

             

Interest income

  $ 177     $ 156     $ 672     $ 557     $ 494     $ 375     $ 298  

Interest expense

    24       13       70       39       29       24       26  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net interest income

    153       143       602       518       465       351       272  

Provision for credit losses

    7       4       22       20       21       12       (6
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net interest income after provision for credit losses

    146       139       581       498       444       339       278  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Noninterest income

    93       92       367       375       322       221       154  

Noninterest expense

    168       156       659       620       534       437       295  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

    71       75       289       253       232       123       137  

Applicable income tax expense (benefit)

    14       21       (15     79       73       37       39  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income

    57       54       304       174       159       86       98  

Less: Net income attributable to noncontrolling interests

    —         —         —         —         —         —         —    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to MB Financial

  $ 57     $ 54     $ 304     $ 174     $ 159     $ 86     $ 98  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to MB Financial common stockholders

  $ 69     $ 53     $ 296     $ 166     $ 150     $ 82     $ 98  

PER COMMON SHARE

             

Net income attributable to MB Financial common stockholders

  $ 0.82     $ 0.63     $ 3.53     $ 2.16     $ 2.03     $ 1.32     $ 1.81  

Net income attributable to MB Financial common stockholders—assuming dilution

    0.81       0.62       3.49       2.13       2.02       1.31       1.79  

Cash dividends declared per share

    0.24       0.19       0.82       0.74       0.65       0.52       0.44  

Book value at period end

    32.59       29.83       32.17       29.43       26.77       25.58       24.14  

Dividend payout ratio

    29.6     30.6     23.5     34.7     32.2     39.7     24.6

Weighted-average common shares outstanding—basic (in thousands)

    84,066       83,662       83,837       76,969       74,178       62,012       54,510  

Weighted-average common shares outstanding—diluted (in thousands)

    84,896       84,778       84,823       77,976       74,849       62,573       54,994  


 

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    Three months ended
March 31,
    Years ended December 31,  

(dollars in millions, except per share data)

      2018             2017         2017     2016     2015     2014     2013  
    (unaudited)                                

BALANCE SHEET DATA—AT PERIOD END

             

Loans and leases, including held for sale

  $ 14,497     $ 13,452     $ 14,515     $ 13,486     $ 10,539     $ 9,820     $ 5,713  

Interest-earning assets

    17,290       16,412       17,178       16,494       13,542       12,599       8,334  

Total assets

    20,168       19,146       20,087       19,302       15,585       14,602       9,641  

Deposits

    14,971       13,999       14,958       14,110       11,505       10,991       7,381  

Long-term debt

    851       316       505       312       400       83       62  

MB Financial stockholders’ equity

    2,934       2,616       3,010       2,579       2,087       2,028       1,327  

MB Financial common stockholders’ equity

    2,740       2,501       2,700       2,464       1,972       1,913       1,327  

PERFORMANCE RATIOS

             

Return on average total assets

    1.15     1.16     1.55     1.03     1.07     0.75     1.05

Return on average common equity

    10.3       8.6       11.7       7.7       7.8       5.3       7.6  

Net interest margin (FTE)

    3.67       3.69       3.70       3.70       3.81       3.75       3.57  

CAPITAL RATIOS

             

MB Financial average stockholders’ equity to average assets

    14.85     13.62     13.58     13.45     13.89     13.96     13.82

MB Financial average common stockholders’ equity to average assets

    13.59       13.01       12.88       12.77       13.11       13.59       13.82  

Tier 1 risk-based capital

    10.64       9.54       11.20       9.40       11.54       12.61       15.28  

Total risk-based capital

    13.57       11.80       14.23       11.63       12.54       13.62       16.53  

Tier 1 leverage

    9.73       8.58       10.02       8.38       10.40       10.47       11.22  

OTHER DATA

             

Full-time equivalent employees

    3,567       3,494       3,574       3,486       2,980       2,839       1,775  

Branches

    86       95       86       96       81       86       85  

 

FTE = Fully taxable-equivalent



 

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SELECTED HISTORICAL FINANCIAL DATA FOR FIFTH THIRD

The following table summarizes financial results achieved by Fifth Third for the periods and at the dates indicated and should be read in conjunction with Fifth Third’s consolidated financial statements and the notes to the consolidated financial statements contained in reports that Fifth Third has previously filed with the SEC. Historical financial information for Fifth Third can be found in its Quarterly Report on Form 10-Q for the quarter ended March 31, 2018 and its Annual Report on Form 10-K for the year ended December 31, 2017. See “Where You Can Find More Information” in the forepart of this proxy statement/prospectus for instructions on how to obtain the information that has been incorporated by reference into this proxy statement/prospectus. Financial amounts as of and for the three months ended March 31, 2018 and 2017 are unaudited (and are not necessarily indicative of the results of operations for the full year or any other interim period), but management of Fifth Third believes that such amounts reflect all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of its results of operations and financial position as of the dates and for the periods indicated. You should not assume the results of operations for past periods and for the three months ended March 31, 2018 and 2017 indicate results for any future period.

 

    Three months ended
March 31,
    Years ended December 31,  

(dollars in millions, except per share data)

  2018     2017     2017     2016     2015     2014     2013  
    (unaudited)                                

RESULTS OF OPERATIONS—FOR THE PERIOD

             

Interest income

  $ 1,206     $ 1,086     $ 4,489     $ 4,193     $ 4,028     $ 4,030     $ 3,973  

Interest expense

    210       153       691       578       495       451       412  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net interest income

    996       933       3,798       3,615       3,533       3,579       3,561  

Provision for loan and lease losses

    23       74       261       343       396       315       229  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net interest income after provision for loan and lease losses

    973       859       3,537       3,272       3,137       3,264       3,332  

Noninterest income

    909       523       3,224       2,696       3,003       2,473       3,227  

Noninterest expense

    1,046       986       3,990       3,903       3,775       3,709       3,961  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

    836       396       2,771       2,065       2,365       2,028       2,598  

Applicable income tax expense

    132       91       577       505       659       545       772  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income

    704       305       2,194       1,560       1,706       1,483       1,826  

Less: Net income attributable to noncontrolling interests

    —         —         —         (4     (6     2       (10
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to Fifth Third

    704       305       2,194       1,564       1,712       1,481       1,836  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to Fifth Third common shareholders

  $ 689     $ 290     $ 2,119     $ 1,489     $ 1,637     $ 1,414     $ 1,799  

PER COMMON SHARE

             

Net income attributable to Fifth Third common shareholders

    0.99       0.38       2.88       1.95       2.03       1.68       2.05  

Net income attributable to Fifth Third common shareholders—assuming dilution

    0.97       0.38       2.83       1.93       2.01       1.66       2.02  

Cash dividends declared per share

    0.16       0.14       0.60       0.53       0.52       0.51       0.47  

Book value at period end

    21.68       20.13       21.67       19.82       18.48       17.35       15.85  

Dividend payout ratio

    16.2     36.8     20.8     27.2     25.6     30.3     22.9

Weighted-average common shares outstanding—basic (in thousands)

    689,820       747,668       728,289       757,432       798,628       833,116       869,463  

Weighted-average common shares outstanding—diluted (in thousands)

    704,101       760,809       740,691       764,495       807,659       842,967       894,736  


 

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    Three months ended
March 31,
    Years ended December 31,  

(dollars in millions, except per share data)

  2018     2017     2017     2016     2015     2014     2013  
    (unaudited)                                

BALANCE SHEET DATA—AT PERIOD END

             

Loans and leases, including held for sale

  $ 92,687     $ 92,244     $ 92,462     $ 92,849     $ 93,485     $ 91,345     $ 89,558  

Interest-earning assets

    127,265       126,134       127,921       127,222       125,656       122,214       113,822  

Total assets

    141,500       140,200       142,193       142,177       141,082       138,706       130,443  

Deposits

    105,461       104,156       103,162       103,821       103,205       101,712       99,275  

Long-term debt

    14,800       13,658       14,904       14,388       15,844       14,967       9,633  

Fifth Third common shareholders’ equity

    14,853       15,099       15,034       14,874       14,508       14,295       13,555  

Fifth Third shareholders’ equity

    16,184       16,430       16,365       16,205       15,839       15,626       14,589  

PERFORMANCE RATIOS

             

Return on average total assets

    2.02     0.88     1.56     1.10     1.22     1.12     1.48

Return on average common equity

    18.6       7.8       13.9       9.8       11.3       10.0       13.1  

Net interest margin (FTE)

    3.18       3.02       3.03       2.88       2.88       3.10       3.32  

CAPITAL RATIOS

             

Fifth Third average shareholders’ equity to average assets

    11.52     11.72     11.80     11.67     11.33     11.59     11.56

Fifth Third average common shareholders’ equity to average assets

    10.58       10.77       10.85       10.73       10.38       10.68       11.07  

Tier 1 risk-based capital

    11.95       11.90       11.74       11.50       10.93       10.83       10.43  

Total risk-based capital

    15.25       15.45       15.16       15.02       14.13       14.33       14.17  

Tier 1 leverage

    10.11       10.15       10.01       9.90       9.54       9.66       9.73  

OTHER DATA

             

Full-time equivalent employees

    18,344       17,763       18,125       17,844       18,261       18,351       19,446  

Branches

    1,153       1,155       1,154       1,191       1,254       1,302       1,320  

 

FTE = Fully taxable-equivalent



 

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UNAUDITED COMPARATIVE PER COMMON SHARE DATA

The following table sets forth the basic earnings, diluted earnings, cash dividend, and book value per common share data for Fifth Third and MB Financial on a historical basis and on a pro forma combined basis, for the three months ended March 31, 2018 and the basic earnings, diluted earnings and cash dividend per common share for the year ended December 31, 2017. The unaudited pro forma data was derived by combining the historical financial information of Fifth Third and MB Financial using the acquisition method of accounting for business combinations, assumes the transaction is completed as contemplated and represents a current estimate based on available information of the combined company’s results of operations. The unaudited pro forma data and equivalent per share information gives effect to the merger as if the transaction had been effective on the dates presented, in the case of the book value data, and as if the transactions had become effective on January 1, 2017, in the case of the earnings per share and dividends declared data. The pro forma financial adjustments record the assets and liabilities of MB Financial at their estimated fair values and are subject to adjustment as additional information becomes available and as additional analysis is performed.

The unaudited pro forma data below should be read in conjunction with Fifth Third’s and MB Financial’s audited financial statements as of and for the year ended December 31, 2017 and their respective unaudited financial statements as of and for the three months ended March 31, 2018. This information is presented for illustrative purposes only. You should not rely on the unaudited pro forma data or equivalent amounts presented below as they are not necessarily indicative of the operating results or financial position that would have occurred if the merger had been completed as of the dates indicated, nor are they necessarily indicative of the future operating results or financial position of the combined company. The pro forma information, although helpful in illustrating the financial characteristics of the combined company under one set of assumptions, does not reflect the benefits of expected cost savings, opportunities to earn additional revenue, the impact of merger- and integration-related costs, or other factors that may result as a consequence of the merger and, accordingly, does not attempt to predict or suggest future results.

 

     Fifth
Third
As
Reported
     MB
Financial
As
Reported
     Pro
Forma
Combined
Fifth
Third(a)
     Pro Forma
Equivalent
Per
Share
Information(b)
 

For the three months ended March 31, 2018:

           

Basic earnings per common share

   $ 0.99      $ 0.82      $ 0.92      $ 1.33  

Diluted earnings per common share

     0.97        0.81        0.90        1.31  

Cash dividends declared per common share(c)

     0.16        0.24        0.16        0.23  

Book value per common share at March 31, 2018(d)

     21.68        32.59        22.97        33.30  

For the year ended December 31, 2017:

           

Basic earnings per common share

   $ 2.88      $ 3.53      $ 2.79      $ 4.04  

Diluted earnings per common share

     2.83        3.49        2.74        3.98  

Cash dividends declared per common share(c)

     0.60        0.82        0.60        0.87  

 

(a)

Pro forma earnings per share are based on pro forma combined net income and pro forma combined weighted-average common shares outstanding for the period.

(b)

Pro forma equivalent per share information is calculated based on pro forma combined multiplied by the exchange ratio of 1.45.

(c)

Pro forma dividends per share represent Fifth Third’s historical dividends per common share.

(d)

Book value per common share is calculated based on pro forma combined equity and pro forma combined common shares outstanding at the end of the period.



 

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COMPARATIVE PER SHARE MARKET PRICE AND DIVIDEND INFORMATION

The table below sets forth, for the calendar quarters indicated, the high and low sales prices, as well as the dividend paid, per Fifth Third common share, which trades on the NASDAQ under the symbol “FITB,” and per share of MB Financial common stock, which trades on the NASDAQ under the symbol “MBFI.”

 

     Fifth Third Common Shares      MB Financial Common Stock  
     High      Low      Dividend      High      Low      Dividend  

2016

                 

First Quarter

   $ 19.73      $ 13.84      $ 0.13      $ 33.62      $ 27.98      $ 0.17  

Second Quarter

     19.34        16.02        0.13        36.71        30.53        0.19  

Third Quarter

     21.11        16.26        0.13        39.50        34.88        0.19  

Fourth Quarter

     27.88        19.57        0.14        48.06        35.00        0.19  

2017

                 

First Quarter

   $ 28.97      $ 24.02      $ 0.14      $ 48.47      $ 39.97      $ 0.19  

Second Quarter

     26.69        23.20        0.14        45.22        39.20        0.21  

Third Quarter

     28.06        24.66        0.16        45.54        38.28        0.21  

Fourth Quarter

     31.83        27.38        0.16        47.64        42.39        0.21  

2018

                 

First Quarter

   $ 34.57      $ 30.18      $ 0.16      $ 47.50      $ 39.15      $ 0.24  

Second Quarter

   $ 34.67      $ 28.55      $ 0.18      $ 51.59      $ 39.68      $ 0.24  

Third Quarter (through August 1, 2018)

   $ 30.28      $ 28.29        —        $ 49.35      $ 46.11        —    

On May 18, 2018, the last trading day before the public announcement of the signing of the merger agreement, the closing sale price per Fifth Third common share on the NASDAQ was $33.56 and the closing sale price per share of MB Financial common stock on the NASDAQ was $43.65. On August 1, 2018, the latest practicable trading date before the date of this proxy statement/prospectus, the last sale price per Fifth Third common share on the NASDAQ was $29.78 and the last sale price per share of MB Financial common stock on the NASDAQ was $48.60.



 

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FIFTH THIRD SHARE REPURCHASES

On May 21, 2018, Fifth Third issued a press release announcing that it intended to complete its 2017 Comprehensive Capital Analysis and Review buyback plan by repurchasing up to $235 million of Fifth Third common stock before the beginning of the proxy solicitation in connection with the MB Financial stockholder vote on the merger and, subject to regulatory approvals, may repurchase additional shares of Fifth Third common stock after the MB Financial stockholder vote. On May 23, 2018, in furtherance of this objective, Fifth Third entered into a new share repurchase agreement (the “Repurchase Agreement”) with Morgan Stanley & Co. LLC (“MSCO”) providing for the purchase by Fifth Third of approximately $235 million of its outstanding common stock. Under the Repurchase Agreement, Fifth Third paid $235 million to MSCO on May 25, 2018, and on the same date received from MSCO 6,402,244 shares, which represented a substantial majority of the shares underlying the Repurchase Agreement. At settlement of the Repurchase Agreement on June 15, 2018, MSCO delivered 1,172,122 additional shares of Fifth Third’s common stock to Fifth Third, which was based generally on a discount to the average of the daily volume-weighted average NASDAQ prices of Fifth Third’s common stock during the term of the Repurchase Agreement (which volume-weighted average NASDAQ price was $31.1817).

On July 19, 2018, Fifth Third announced in its earnings press release for the second quarter of 2018 that the Board of Governors of the Federal Reserve System did not object to Fifth Third’s 2018 Comprehensive Capital Analysis and Review buyback plan and Fifth Third intended to repurchase up to $500 million of Fifth Third common stock before the beginning of the proxy solicitation in connection with the MB Financial stockholder vote on the merger and may repurchase additional shares of Fifth Third common stock after the MB Financial stockholder vote. As of August 1, 2018, Fifth Third repurchased 15,380,229 shares at a volume-weighted average price of $29.46 under this buyback plan. Fifth Third expects to purchase up to approximately 1,750,000 additional shares of Fifth Third’s common stock on August 2, 2018.

 



 

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This proxy statement/prospectus contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 including, but not limited to, Fifth Third’s and MB Financial’s expectations or predictions of future financial or business performance or conditions. Forward-looking statements are typically identified by words such as “believe,” “expect,” “anticipate,” “intend,” “target,” “estimate,” “continue,” “positions,” “plan,” “predict,” “project,” “forecast,” “guidance,” “goal,” “objective,” “prospects,” “possible” or “potential,” by future conditional verbs such as “assume,” “will,” “would,” “should,” “could” or “may”, or by variations of such words or by similar expressions. These forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time. Forward-looking statements speak only as of the date they are made and we assume no duty to update forward-looking statements. Actual results may differ materially from current projections.

In addition to factors previously disclosed in Fifth Third’s and MB Financial’s reports filed with the SEC and those identified elsewhere in this filing (including the “Risk Factors” beginning on page 27), the following factors among others, could cause actual results to differ materially from forward-looking statements or historical performance:

 

   

the ability to satisfy closing conditions to the merger, including the approval by MB Financial stockholders, on the expected terms and schedule;

 

   

the ability to obtain regulatory approvals required to complete the merger, and the timing and conditions for such approvals, including conditions that could reduce the expected synergies and other benefits of the merger, result in a material delay or the abandonment of the merger or otherwise have an adverse impact on the surviving company;

 

   

delay in closing the merger;

 

   

difficulties and delays in integrating the Fifth Third and MB Financial businesses or fully realizing cost savings and other benefits;

 

   

business disruptions resulting from or following the merger;

 

   

changes in asset quality and credit risk;

 

   

the inability to sustain revenue and earnings growth;

 

   

changes in interest rates and capital markets;

 

   

inflation;

 

   

customer acceptance of Fifth Third’s and MB Financial’s products and services;

 

   

customer borrowing, repayment, investment and deposit practices;

 

   

customer disintermediation;

 

   

the introduction, withdrawal, success and timing of business initiatives;

 

   

competitive conditions;

 

   

the inability to realize cost savings or revenues or to implement integration plans and other consequences associated with mergers, acquisitions and divestiture;

 

   

economic conditions; and

 

   

the impact, extent and timing of technological changes, capital management activities, and other actions of the Federal Reserve Board and legislative and regulatory actions and reforms.

For any forward-looking statements made in this proxy statement/prospectus or in any documents incorporated by reference into this proxy statement/prospectus, Fifth Third and MB Financial claim the protection of the safe

 

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harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. You are cautioned not to place undue reliance on these statements, which speak only as of the date of this proxy statement/prospectus or the date of the applicable document incorporated by reference in this proxy statement/prospectus. Except to the extent required by applicable law, Fifth Third and MB Financial do not undertake to update forward-looking statements to reflect facts, circumstances, assumptions or events that occur after the dates on which the forward-looking statements are made. All written and oral forward-looking statements concerning the merger or other matters addressed in this proxy statement/prospectus and attributable to Fifth Third, MB Financial or any person acting on their behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this proxy statement/prospectus.

 

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RISK FACTORS

In addition to the other information contained in or incorporated by reference into this proxy statement/prospectus, including the matters addressed under the caption “Forward-Looking Statements,” you should carefully consider the following risk factors in deciding how to vote on the proposals presented in this proxy statement/prospectus. See “Where You Can Find More Information” in the forepart of this proxy statement/prospectus and “Incorporation of Certain Documents by Reference” beginning on page 133.

Risks Related to the Merger

Because the Market Price of Fifth Third Common Shares Will Fluctuate, MB Financial Common Stockholders Cannot Be Sure of the Value of the Merger Consideration They Will Receive.

Upon completion of the merger, each share of MB Financial common stock will be converted into the per share merger consideration consisting of Fifth Third common shares and cash pursuant to the terms of the merger agreement. The stock portion of the merger consideration that MB Financial stockholders will receive is a fixed number of Fifth Third common shares; it is not a number of shares with a particular fixed market value. See “The Merger—Terms of the Merger” beginning on page 46. The market value of Fifth Third common shares and MB Financial common stock at the effective time of the merger may vary significantly from their respective values on the date the merger agreement was executed or at other dates, including the date on which MB Financial stockholders vote on the approvals needed for the merger. Because the exchange ratio relating to the stock portion of the merger consideration is fixed at 1.45 and will not be adjusted to reflect any changes in the market value of Fifth Third common shares or MB Financial common stock, the market value of the Fifth Third common shares issued in connection with the merger and the MB Financial common stock converted in connection with the merger may be higher or lower than the values of those shares on earlier dates, and may be higher or lower than the value used to determine the exchange ratio. Accordingly, at the time of the special meeting, MB Financial common stockholders will not know or be able to calculate the market value of the Fifth Third common shares they would receive upon the completion of the merger. Stock price changes may result from a variety of factors, including changes in the business, operations or prospects of Fifth Third or MB Financial, regulatory considerations, and general business, market, industry or economic conditions. Many of these factors are outside of the control of Fifth Third and MB Financial.

MB Financial Common Stockholders Will Have a Reduced Ownership and Voting Interest After the Merger and Will Exercise Less Influence Over Management.

MB Financial common stockholders currently have the right to vote in the election of the MB Financial Board of Directors and on other matters requiring stockholder approval under Maryland law and MB Financial’s charter and bylaws. Upon the completion of the merger, each MB Financial common stockholder will become a stockholder of Fifth Third with a percentage ownership of Fifth Third that is smaller than such stockholder’s percentage ownership of MB Financial. Additionally, only two out of the expected fourteen members of the Fifth Third Board of Directors at the effective time of the merger will be appointed by MB Financial upon the completion of the merger. Based on the number of issued and outstanding Fifth Third common shares and shares of MB Financial common stock on August 1, 2018, and based on the exchange ratio of 1.45, the common stockholders of MB Financial, as a group, will receive shares in the merger constituting approximately 16% of Fifth Third common shares expected to be outstanding immediately after the merger (without giving effect to any Fifth Third common shares held by MB Financial common stockholders prior to the merger). Because of this, current MB Financial common stockholders, as a group, will have less influence on the Board of Directors, management and policies of Fifth Third (as the combined company following the merger) than they now have on the Board of Directors, management and policies of MB Financial.

 

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The Market Price of Fifth Third Common Shares After the Merger May be Affected by Factors Different from Those Currently Affecting the Prices of Fifth Third Common Shares and MB Financial Common Stock.

Upon completion of the merger, holders of MB Financial common stock will become holders of Fifth Third common shares. Fifth Third’s businesses differ from those of MB Financial, and accordingly the results of operations of Fifth Third will be affected by some factors that are different from those currently affecting the results of operations of MB Financial. For example, Fifth Third operates in certain states of the United States, including Florida, Georgia, Kentucky, Michigan, North Carolina, Ohio, Tennessee and West Virginia, where MB Financial does not have significant operations. Accordingly, the results of operations of Fifth Third will be affected by business and other developments in those areas of the country to a larger extent than those of MB Financial. See “Where You Can Find More Information” in the forepart of this proxy statement/prospectus and “Incorporation of Certain Documents by Reference” beginning on page 133.

Fifth Third May Fail to Realize the Anticipated Benefits of the Merger.

Fifth Third and MB Financial have operated and, until the completion of the merger, will continue to operate, independently. The success of the merger, including anticipated benefits and cost savings, will depend on, among other things, Fifth Third’s ability to combine the businesses of Fifth Third and MB Financial in a manner that permits growth opportunities, including, among other things, enhanced revenues and revenue synergies, an expanded market reach and operating efficiencies, and does not materially disrupt the existing customer relationships of Fifth Third or MB Financial or result in decreased revenues due to any loss of customers. If Fifth Third is not able to successfully achieve these objectives, the anticipated benefits of the merger may not be realized fully or at all or may take longer to realize than expected. Failure to achieve these anticipated benefits could result in increased costs, decreases in the amount of expected revenues and diversion of management’s time and energy and could have an adverse effect on the combined company’s business, financial condition, operating results and prospects.

Certain employees may not be employed by Fifth Third after the merger. In addition, employees that Fifth Third wishes to retain may elect to terminate their employment as a result of the merger, which could delay or disrupt the integration process. It is possible that the integration process could result in the disruption of Fifth Third’s or MB Financial’s ongoing businesses or cause inconsistencies in standards, controls, procedures and policies that adversely affect the ability of Fifth Third or MB Financial to maintain relationships with customers and employees or to achieve the anticipated benefits of the merger.

Among the factors considered by the Boards of Directors of Fifth Third and MB Financial in connection with their respective approvals of the merger agreement were the benefits that could result from the merger. There can be no assurance that these benefits will be realized within the time periods contemplated or at all.

Regulatory Approvals May Not Be Received, May Take Longer than Expected or May Impose Conditions that Are Not Presently Anticipated or Cannot Be Met.

Before the transactions contemplated in the merger agreement can be completed, various approvals must be obtained from the bank regulatory and other governmental authorities. In deciding whether to grant these approvals, the relevant governmental entities will consider a variety of factors, including the regulatory standing of each of the parties and the effect of the merger on competition. An adverse development in either party’s regulatory standing or other factors could result in an inability to obtain one or more of the required regulatory approvals or delay receipt of required approvals. The Federal Reserve Board has stated that if supervisory issues arise during processing of an application for approval of a merger transaction, a banking organization will be expected to withdraw its application pending resolution of such supervisory concerns. Accordingly, if there is an adverse development in either party’s regulatory standing, Fifth Third may be required to withdraw its application for approval of the proposed merger and, if possible, resubmit it after the applicable supervisory concerns have been resolved.

 

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The terms of the approvals that are granted may impose conditions, limitations, obligations or costs, or place restrictions on the conduct of the combined company’s business or require changes to the terms of the transactions contemplated by the merger agreement. There can be no assurance that regulators will not impose any such conditions, limitations, obligations or restrictions and that such conditions, limitations, obligations or restrictions will not have the effect of delaying the completion of any of the transactions contemplated by the merger agreement, imposing additional material costs on or materially limiting the revenues of the combined company following the merger or otherwise reduce the anticipated benefits of the merger if the merger were consummated successfully within the expected timeframe. Nor can there be any assurance that any such conditions, terms, obligations or restrictions will not result in the delay or abandonment of the merger. Additionally, the completion of the merger is conditioned on the absence of certain orders, injunctions or decrees by any court or regulatory agency of competent jurisdiction that would prohibit or make illegal the completion of any of the transactions contemplated by the merger agreement.

Fifth Third and MB Financial believe that the proposed transactions should not raise significant regulatory concerns and that Fifth Third will be able to obtain all requisite regulatory approvals in a timely manner. However, the processing time for obtaining regulatory approvals for mergers of banking institutions, particularly for larger institutions, has increased since the financial crisis. In addition, despite the parties’ commitments to use their reasonable best efforts to comply with conditions imposed by regulatory entities, under the terms of the merger agreement, Fifth Third and MB Financial will not be required to take actions that would reasonably be expected to have a material adverse effect on Fifth Third and its subsidiaries, taken as a whole, after giving effect to the merger (measured on a scale relative to MB Financial and its subsidiaries, taken as a whole).

The Merger Agreement May Be Terminated in Accordance with Its Terms and the Merger May Not Be Completed.

The merger agreement is subject to a number of conditions which must be fulfilled in order to complete the merger. Those conditions include: approval of the merger and charter amendment by the MB Financial common stockholders, receipt of requisite regulatory approvals, absence of orders prohibiting completion of any of the proposed transactions, effectiveness of the registration statement of which this proxy statement/prospectus is a part, approval of the Fifth Third common shares to be issued in connection with the merger for listing on the NASDAQ, the accuracy of the representations and warranties by both parties (subject to the materiality standards set forth in the merger agreement) and the performance by both parties of their covenants and agreements, and the receipt by both parties of legal opinions from their respective tax counsels. These conditions to the closing of the merger may not be fulfilled in a timely manner or at all, and, accordingly, the merger may not be completed. In addition, the parties can mutually decide to terminate the merger agreement at any time, before or after stockholder approval, or Fifth Third or MB Financial may elect to terminate the merger agreement in certain other circumstances.

Termination of the Merger Agreement Could Negatively Impact MB Financial.

If the merger is not completed for any reason, including as a result of MB Financial stockholders declining to approve the MB Financial stockholder matters, the ongoing business of MB Financial may be adversely impacted and, without realizing any of the anticipated benefits of completing the merger, MB Financial would be subject to a number of risks, including the following:

 

   

MB Financial may experience negative reactions from the financial markets, including negative impacts on its stock price (including to the extent that the current market price reflects a market assumption that the merger will be completed);

 

   

MB Financial may experience negative reactions from its customers, vendors and employees;

 

   

MB Financial will have incurred substantial expenses and will be required to pay certain costs relating to the merger, whether or not the merger is completed;

 

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the merger agreement places certain restrictions on the conduct of MB Financial’s businesses prior to completion of the merger. Such restrictions, the waiver of which is subject to the consent of Fifth Third (not to be unreasonably withheld, conditioned or delayed), may prevent MB Financial from making certain acquisitions or taking certain other specified actions during the pendency of the merger (see the section entitled “The Merger Agreement—Covenants and Agreements” beginning on page 86 of this proxy statement/prospectus for a description of the restrictive covenants applicable to MB Financial); and

 

   

matters relating to the merger (including integration planning) will require substantial commitments of time and resources by MB Financial management, which would otherwise have been devoted to other opportunities that may have been beneficial to MB Financial as an independent company.

If the merger agreement is terminated and MB Financial’s Board of Directors seeks another merger or business combination, MB Financial stockholders cannot be certain that MB Financial will be able to find a party willing to offer equivalent or more attractive consideration than the consideration Fifth Third has agreed to provide in the merger, or that such other merger or business combination will be completed. If the merger agreement is terminated under certain circumstances, MB Financial may be required to pay a termination fee of $151.2 million to Fifth Third. See “The Merger Agreement—Termination; Termination Fee” on page 96.

MB Financial Will Be Subject to Business Uncertainties and Contractual Restrictions While the Merger Is Pending.

Uncertainty about the effect of the merger on employees and customers may have an adverse effect on MB Financial and consequently on Fifth Third. These uncertainties may impair MB Financial’s ability to attract, retain and motivate key personnel until the merger is completed, and could cause customers and others that deal with MB Financial to seek to change existing business relationships with MB Financial. Retention of certain employees may be challenging during the pendency of the merger, as certain employees may experience uncertainty about their future roles. If key employees depart because of issues relating to the uncertainty or difficulty of integration or a desire not to remain with the business, Fifth Third’s business following the merger could be negatively impacted. In addition, the merger agreement restricts MB Financial from making certain acquisitions and taking other specified actions without the consent of Fifth Third until the merger occurs. These restrictions may prevent MB Financial from pursuing attractive business opportunities that may arise prior to the completion of the merger. See “The Merger Agreement—Covenants and Agreements—Conduct of Business Prior to the Completion of the Merger” beginning on page 86.

MB Financial Directors and Officers May Have Interests in the Merger Different From the Interests of MB Financial Stockholders.

The interests of some of the directors and executive officers of MB Financial may be different from those of MB Financial stockholders, and directors and officers of MB Financial may be participants in arrangements that are different from, or are in addition to, those of MB Financial stockholders. See “The Merger—Interests of MB Financial Directors and Executive Officers in the Merger” beginning on page 70.

The Merger Agreement Contains Provisions that May Discourage Other Companies from Trying to Acquire MB Financial for Greater Merger Consideration.

The merger agreement contains provisions that may discourage a third party from submitting a business combination proposal to MB Financial that might result in greater value to MB Financial’s stockholders than the merger or may result in a potential competing acquirer proposing to pay a lower per share price to acquire MB Financial than it might otherwise have proposed to pay absent such provisions. These provisions include a general prohibition on MB Financial from soliciting, or, subject to certain exceptions relating to the exercise of fiduciary duties by MB Financial’s Board of Directors, entering into discussions with any third party regarding

 

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any acquisition proposal or offers for competing transactions. MB Financial also has an unqualified obligation to submit the proposal to approve the merger to a vote by its stockholders, even if MB Financial receives an alternative acquisition proposal that its Board of Directors believes is superior to the merger, unless the merger agreement has been terminated in accordance with its terms. In addition, MB Financial may be required to pay Fifth Third a termination fee of $151.2 million upon termination of the merger agreement in certain circumstances involving acquisition proposals for competing transactions. See “The Merger Agreement—Termination; Termination Fee” beginning on page 96.

The Opinion of MB Financial’s Financial Advisor Delivered to the MB Financial Board of Directors Prior to the Signing of the Merger Agreement Will Not Reflect Changes in Circumstances Following the Date of the Opinion.

The opinion from MB Financial’s financial advisor was delivered on and dated May 20, 2018. Changes in the operations and prospects of MB Financial or Fifth Third, general market and economic conditions and other factors that may be beyond the control of MB Financial or Fifth Third may significantly alter the value of MB Financial or the prices of the Fifth Third common shares or shares of MB Financial common stock by the time the merger is completed. The opinion does not speak as of the time the merger will be completed or as of any date other than the date of such opinion. See “The Merger—Opinion of MB Financial’s Financial Advisor” beginning on page 59.

Fifth Third and MB Financial Will Incur Transaction and Integration Costs in Connection with the Merger.

Each of Fifth Third and MB Financial has incurred and expects that it will incur significant, non-recurring costs in connection with consummating the merger. In addition, Fifth Third will incur integration costs following the completion of the merger as Fifth Third integrates the businesses of the two companies, including facilities and systems consolidation costs and employment-related costs. There can be no assurances that the expected benefits and efficiencies related to the integration of the businesses will be realized to offset these transaction and integration costs over time. See the risk factor entitled “—Fifth Third May Fail to Realize the Anticipated Benefits of the Merger” above. Fifth Third and MB Financial may also incur additional costs to maintain employee morale and to retain key employees. Fifth Third and MB Financial will also incur significant legal, financial advisor, accounting, banking and consulting fees, fees relating to regulatory filings and notices, SEC filing fees, printing and mailing fees and other costs associated with the merger. Some of these costs are payable regardless of whether the merger is completed.

MB Financial Stockholders Will Become Stockholders of an Ohio Corporation and Will Have Their Rights As Stockholders Governed by Fifth Third’s Organizational Documents and Ohio Law.

Upon completion of the merger, holders of shares of MB Financial common stock, MB Financial stock options, MB Financial restricted stock awards, MB Financial restricted stock unit awards, MB Financial performance share unit awards and MB Financial preferred stock will become holders of Fifth Third common shares, Fifth Third stock options, Fifth Third restricted stock awards or Fifth Third restricted stock unit awards and, solely in the case of the direct merger, new Fifth Third preferred stock, which will be governed by Fifth Third’s organizational documents and the Ohio General Corporation Law. As a result, there will be differences between the rights currently enjoyed by MB Financial stockholders and the rights they expect to have as stockholders of the combined company. See “Comparison of Stockholders’ Rights” beginning on page 104.

Potential Litigation Against MB Financial and Fifth Third Could Result in an Injunction Preventing the Completion of the Merger or a Judgment Resulting in the Payment of Damages.

Stockholders of MB Financial may file lawsuits against Fifth Third, MB Financial and/or the directors and officers of either company in connection with the merger. These lawsuits could prevent or delay the completion of the merger and result in significant costs to MB Financial and/or Fifth Third, including any costs associated

 

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with the indemnification of directors and officers. The defense or settlement of any lawsuit or claim that remains unresolved at the time the merger is completed may adversely affect Fifth Third’s business, financial condition, results of operations and cash flows.

Additional Risks Relating to the New Fifth Third Preferred Stock or MB Financial Preferred Stock

Fifth Third’s Creditworthiness May Affect the Market Value of the New Fifth Third Preferred Stock.

The value of the new Fifth Third preferred stock if the direct merger is completed will be affected, among other things, by Fifth Third’s general creditworthiness. For a discussion and analysis of known material trends and events, and risks or uncertainties that are reasonably expected to have a material effect on Fifth Third’s business, financial condition or results of operations, you should review the Fifth Third documents incorporated by reference into this proxy statement/prospectus. See “Incorporation of Certain Documents by Reference” beginning on page 133.

Changes in Credit Ratings May Affect the Market Value of the New Fifth Third Preferred Stock.

If the direct merger is completed, real or anticipated changes in credit ratings on Fifth Third or the new Fifth Third preferred stock may affect the market value of the new Fifth Third preferred stock. In addition, real or anticipated changes in credit ratings can affect the cost at which Fifth Third can transact or obtain funding, and thereby affect Fifth Third’s liquidity, business, financial condition or results of operations.

In the Event of Fifth Third’s Insolvency, the New Fifth Third Preferred Stock Will Rank Junior to Other Securities.

In the event of Fifth Third’s insolvency, any new Fifth Third preferred stock issued in the direct merger and outstanding will rank equally with certain of Fifth Third’s other outstanding series of preferred stock. If Fifth Third becomes insolvent or is wound up, its assets must be used to pay its deposit liabilities and other debt, including subordinated debt, before payments may be made on Fifth Third’s preferred stock, including the new Fifth Third preferred stock. See “Description of Fifth Third Capital Stock” beginning on page 118.

Yields on Similar Securities Will Likely Affect the Market Value of the New Fifth Third Preferred Stock.

Prevailing yields on securities similar to the new Fifth Third preferred stock will likely affect the market value of the new Fifth Third preferred stock. Assuming all other factors remain unchanged, the market value of the new Fifth Third preferred stock will likely decline as prevailing yields for similar securities rise, and will likely increase as prevailing yields for similar securities decline.

An active trading market for the new Fifth Third preferred stock (or related depositary shares) does not exist and may not develop and the market price and liquidity of the depositary shares may be adversely affected.

The new Fifth Third preferred stock (or related depositary shares), if issuable, are new issues of securities with no established trading market. Fifth Third will use its reasonable best efforts to cause the new Fifth Third preferred stock (or related depositary shares) to be approved for listing on the NASDAQ. However, Fifth Third cannot be certain that the new Fifth Third preferred stock (or related depositary shares) will qualify for listing. If they do not qualify for listing, or if an active trading market does not develop, holders of new Fifth Third preferred stock may have difficulty selling any of the new Fifth Third preferred stock (or related depositary shares). Fifth Third cannot predict the extent to which investor interest in the new Fifth Third preferred stock (or related depositary shares) will lead to the development of an active trading market on the NASDAQ or how liquid that market might become. If an active, liquid market does not develop for the new Fifth Third preferred stock (or related depositary shares), the market price and liquidity of the depositary shares may be adversely affected.

 

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If the alternative merger is effected, the price for MB Financial preferred stock that remains outstanding may be depressed.

If the alternative merger is effected, then the MB Financial preferred stock will remain outstanding after consummation of the alternative merger. However, Fifth Third currently expects to delist the MB Financial preferred stock from the NASDAQ and terminate MB Financial’s registration and reporting obligations with the SEC so that at or promptly following the closing of the alternative merger, the MB Financial preferred stock will no longer trade on the NASDAQ or any other securities exchange. Additionally, MB Financial will no longer file reports or other public disclosure with the SEC. As a result, these actions may have a significant and adverse effect on the liquidity of, and the price of, the MB Financial preferred stock and may result in the MB Financial preferred stock being less liquid for an indefinite period of time.

If the alternative merger is effected, the outstanding shares of MB Financial preferred stock will vote with Fifth Third, as the sole holder of MB Financial common stock, on all matters submitted to a vote of the common stockholders of MB Financial.

Upon completion of the alternative merger, MB Financial will be a subsidiary of Fifth Third, who will control MB Financial. MB Financial preferred stockholders will vote with Fifth Third as a single class on all matters submitted to a vote of Fifth Third, as the sole common stockholder of MB Financial following completion of the alternative merger. Thus, the voting rights that would be conferred upon the MB Financial preferred stockholders by the charter amendment would continue to apply with respect to MB Financial, and not Fifth Third, following completion of the alternative merger.

Risks Relating to the Tax Consequences of the Merger

If the merger does not constitute a reorganization under Section 368(a) of the Internal Revenue Code, then MB Financial stockholders may be responsible for payment of U.S. income taxes related to the consideration they receive in the merger.

The United States Internal Revenue Service (“IRS”) may determine that the merger does not qualify as a tax-free reorganization under Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”). In that case, each MB Financial stockholder would recognize a gain or loss equal to the difference between the sum of any cash consideration and the fair market value of the Fifth Third common shares or Fifth Third preferred stock, as applicable, received by the stockholder in the merger, and such stockholder’s adjusted tax basis in the shares of MB Financial common stock or MB Financial preferred stock exchanged therefor.

The alternative merger’s qualification as a tax-free reorganization is dependent on the market price of Fifth Third common shares and if the market price of Fifth Third common shares declines significantly the merger agreement may be terminated or the alternative merger may not constitute a tax-free reorganization.

The merger agreement is subject to a number of conditions which must be fulfilled in order to complete the merger. One of those conditions includes the receipt by both parties of legal opinions from their respective tax counsels that the alternative merger constitutes a tax-free reorganization. The qualification of the alternative merger as a tax-free reorganization under Section 368(a)(2)(E) of the Internal Revenue Code depends on the application of numerous technical requirements, including whether MB Financial stockholders will receive a sufficient amount of Fifth Third common shares to satisfy the “control” test applicable to the alternative merger. For purposes of Section 368(a)(2)(E) of the Internal Revenue Code, “control” is defined by Section 368(c) as ownership of stock possessing at least 80 percent of the total combined voting power of all classes of stock entitled to vote and at least 80 percent of the total number of shares of all other classes of stock of the corporation. Satisfaction of the control test will depend on the value, as of the closing of the alternative merger, of the Fifth Third common shares received by holders of MB Financial common stock in exchange for MB Financial common stock relative to the value of the consideration other than Fifth Third common shares received by holders of MB Financial common stock in exchange for shares of MB Financial common stock in connection with the alternative merger.

 

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Due to uncertainty surrounding the market price of Fifth Third common shares immediately prior to the closing, if the market price of Fifth Third common shares declines, neither Fifth Third nor MB Financial can assure you that they will be able to obtain legal opinions from their respective tax counsels that the alternative merger constitutes a tax-free reorganization under Section 368(a)(2)(E). Therefore, the legal opinion condition to the closing of the alternative merger may not be fulfilled in a timely manner or at all, and, accordingly, the alternative merger may not be completed.

Further, even if Fifth Third and MB Financial later determine to take the position that the alternative merger qualifies as a tax-free reorganization, neither Fifth Third nor MB Financial can assure you that the IRS will accept the treatment of the alternative merger as a reorganization. If the IRS were to challenge such treatment and successfully contend that the alternative merger failed to qualify as a reorganization, the alternative merger would be a fully taxable transaction to MB Financial stockholders.

Additional Risks Relating to Fifth Third and MB Financial After the Merger

Fifth Third’s and MB Financial’s businesses are, and will continue to be, subject to the risks described in (i) Part I, Item 1A in Fifth Third’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017 and (ii) Part I, Item 1A in MB Financial’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017, in each case, as such risks may be updated or supplemented in each company’s subsequent Quarterly Reports on Form 10-Q or Current Reports on Form 8-K filed with the SEC and incorporated by reference in this proxy statement/prospectus. See “Incorporation of Certain Documents by Reference” beginning on page 133.

 

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MB FINANCIAL SPECIAL MEETING OF STOCKHOLDERS

Date, Time and Place of the Special Meeting

The special meeting of MB Financial stockholders will be held on September 18, 2018, at 8:30 a.m. local time, at MB Financial Center, 6111 North River Road, Rosemont, Illinois 60018. On or about August 3, 2018, this proxy statement/prospectus was mailed to holders of MB Financial common stock and MB Financial preferred stock entitled to vote at the special meeting.

Purpose of the Special Meeting

The special meeting is being held for the following purposes:

 

   

for the holders of MB Financial preferred stock to approve the direct merger (which we refer to as the “preferred stockholder merger proposal”);

 

   

for the holders of MB Financial common stock to approve the merger (whether effected as the direct merger or, in the event the preferred stockholders do not approve the preferred stockholder merger proposal, as the alternative merger) (which we refer to as the “common stockholder merger proposal”);

 

   

for the holders of MB Financial common stock to approve an amendment to the charter of MB Financial and the articles supplementary to the charter of MB Financial relating to the MB Financial preferred stock that would give the holders of MB Financial preferred stock the right to vote with the holders of MB Financial common stock as a single class on all matters submitted to a vote of such common stockholders, to become effective immediately prior to the alternative merger in the event the holders of MB Financial preferred stock do not approve the preferred stockholder merger proposal (which we refer to as the “charter amendment proposal”);

 

   

for the holders of MB Financial common stock to approve, on a non-binding, advisory basis, the compensation to be paid to MB Financial’s named executive officers that is based on or otherwise relates to the merger, discussed under the section entitled “The Merger—Interests of MB Financial Directors and Executive Officers in the Merger” beginning on page 70 (which we refer to as the “merger-related compensation proposal”);

 

   

for the holders of MB Financial preferred stock to approve one or more adjournments of the special meeting, if necessary or appropriate to permit further solicitation of proxies from the holders of MB Financial preferred stock in favor of the preferred stockholder merger proposal (which we refer to as the “preferred stockholder adjournment proposal”); and

 

   

for the holders of MB Financial common stock to approve one or more adjournments of the special meeting, if necessary or appropriate to permit further solicitation of proxies from the holders of MB Financial common stock in favor of the common stockholder merger proposal and/or the charter amendment proposal (which we refer to as the “common stockholder adjournment proposal).

Recommendation of the MB Financial Board of Directors

The MB Financial Board of Directors recommends that holders of MB Financial common stock vote “FOR” the common stockholder merger proposal, “FOR” the charter amendment proposal, “FOR” the merger-related compensation proposal and “FOR” the common stockholder adjournment proposal (if necessary or appropriate), and recommends that holders of MB Financial preferred stock vote “FOR” the preferred stockholder merger proposal and “FOR” the preferred stockholder adjournment proposal (if necessary or appropriate). See The Merger—Recommendation of the MB Financial Board of Directors and Reasons for the Merger beginning on page 54.

 

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Record Date and Quorum

The MB Financial Board of Directors has fixed the close of business on August 1, 2018 as the record date for determining the holders of MB Financial common stock and the holders of MB Financial preferred stock entitled to receive notice of and to vote at the special meeting.

As of the record date, there were 84,420,704 shares of MB Financial common stock outstanding and entitled to vote at the MB Financial special meeting held by 1,366 holders of record. Each share of MB Financial common stock entitles the holder thereof as of the record date to one vote at the special meeting on each proposal to be considered at the special meeting by the common stockholders, provided, however, that pursuant to Section F of Article 5 of MB Financial’s charter, no person who beneficially owns more than 14.9% of the shares of MB Financial common stock outstanding as of the record date may vote shares in excess of this limit.

As of the record date, there were 200,000 shares of MB Financial preferred stock outstanding, all of which were held by Computershare Inc. and Computershare Trust Company N.A. (which we refer to collectively as the “depositary”), on behalf of the holders of depositary shares each representing a 1/40th interest in a share of MB Financial preferred stock. Under the terms of the deposit agreement among MB Financial, the depositary and the holders from time to time of the depositary receipts evidencing the depositary shares, the depositary is required to vote the MB Financial preferred stock in accordance with the instructions of the holders of the depositary shares. Where we refer to “holders of MB Financial preferred stock” or “MB Financial preferred stockholders,” this includes holders of the depositary shares unless the context indicates otherwise.

The holders of a majority of the outstanding shares of MB Financial common stock, present in person or represented by proxy, will constitute a quorum for purposes of the matters being voted upon by the common stockholders. The holders of a majority of the outstanding shares of MB Financial preferred stock, present in person or represented by proxy, will constitute a quorum for purposes of the matters being voted upon by the preferred stockholders.

As of the record date, the directors and executive officers of MB Financial and their affiliates beneficially owned and were entitled to vote 1,866,405 shares of MB Financial common stock, representing approximately 2.2% of the shares of MB Financial common stock outstanding on that date. MB Financial currently expects that its directors and executive officers will vote their shares of MB Financial common stock in favor of the common stockholder merger proposal, the charter amendment proposal, the merger-related compensation proposal and the common stockholder adjournment proposal (if necessary or appropriate), although none of them has entered into any agreements obligating them to do so. As of the record date, none of the directors and executive officers of MB Financial and their affiliates beneficially owned any depositary shares representing interests in MB Financial preferred stock. As of the record date, excluding shares held in a fiduciary or agency capacity, neither Fifth Third nor any of its directors and executive officers and their affiliates beneficially owned any shares of MB Financial common stock or depositary shares representing interests in MB Financial preferred stock.

Required Vote

Preferred Stockholder Merger Proposal

The affirmative vote of the holders of at least two-thirds of the outstanding shares of MB Financial preferred stock as of the record date is required to approve the preferred stockholder merger proposal.

Common Stockholder Merger Proposal

The affirmative vote of the holders of a majority of the outstanding shares of MB Financial common stock as of the record date and entitled to vote thereon is required to approve the common stockholder merger proposal.

 

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Charter Amendment Proposal

The affirmative vote of the holders of a majority of the outstanding shares of MB Financial common stock as of the record date and entitled to vote thereon is required to approve the charter amendment proposal.

Merger-Related Compensation Proposal

The affirmative vote of a majority of the votes cast by the holders of MB Financial common stock on the merger-related compensation proposal is required to approve the merger-related compensation proposal.

Common Stockholder Adjournment Proposal

The affirmative vote of a majority of the votes cast by the holders of MB Financial common stock on the common stockholder adjournment proposal is required to approve the common stockholder adjournment proposal.

Preferred Stockholder Adjournment Proposal

The affirmative vote of a majority of the votes cast by the holders of MB Financial preferred stock is required to approve the preferred stockholder adjournment proposal.

Treatment of Abstentions; Failure to Vote

For purposes of the special meeting, an abstention occurs when an MB Financial stockholder attends the MB Financial special meeting, either in person or by proxy, but abstains from voting.

 

   

For the preferred stockholder merger proposal, the common stockholder merger proposal and the charter amendment proposal, an abstention or failure to vote will have the same effect as a vote cast “AGAINST” such proposals.

 

   

For the merger-related compensation proposal, the common stockholder adjournment proposal and the preferred stockholder adjournment proposal, an abstention or failure to vote will have no effect on the outcome of the vote. For each of these proposals, abstentions are not treated as votes cast and will have no effect on the outcome of the vote, though abstentions are counted towards establishing a quorum.

Proxies and Voting Instructions; Incomplete Proxies and Voting Instructions

If you are a holder of record of shares of MB Financial common stock, you may authorize the persons named in the enclosed proxy card to vote your shares of MB Financial common stock at the special meeting in the manner you direct. You may also use one of the following voting methods:

 

   

By telephone: Use any touch-tone telephone to vote your shares 24 hours a day, 7 days a week. Call (800) 690-6903 and then follow the voice instructions. Please have your proxy card and your social security number or tax identification number available when you call.

 

   

Through the Internet: Use the Internet to vote your shares 24 hours a day, 7 days a week. Follow the instructions as prompted by the menu found at www.proxyvote.com to obtain your records and submit an electronic ballot. Please have your proxy card and your social security number or tax identification number available when you access this voting site.

 

   

By mail: Complete and return the proxy card in the enclosed envelope. The envelope requires no additional postage if mailed in the United States.

MB Financial requests that you vote by telephone, over the Internet or by completing and signing the accompanying proxy card and returning it as soon as possible in the enclosed postage-paid envelope.

 

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When a properly executed proxy card is returned by a holder of record of MB Financial common stock prior to the special meeting, the shares of MB Financial common stock represented by the proxy card will be voted at the special meeting in accordance with the instructions contained on the proxy card. If any properly executed proxy card is returned by a holder of record of MB Financial common stock without indication as to how to vote, the shares of MB Financial common stock represented by the proxy card will be voted as recommended by the MB Financial Board of Directors.

If you hold shares of MB Financial common stock or depositary shares representing interests in MB Financial preferred stock in “street name” through a broker, bank or other nominee, you should check the voting instruction form provided to you by that firm to determine whether you may vote by telephone or the Internet. Please refer to the voting instruction form for the applicable deadline for voting your shares or depositary shares.

YOUR VOTE IS VERY IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES OR DEPOSITARY SHARES YOU OWN. PLEASE VOTE, USING ONE OF THE AVAILABLE METHODS, AS SOON AS POSSIBLE.

Shares Held in Street Name

If you hold shares of MB Financial common stock, or depositary shares representing interests in MB Financial preferred stock, in “street name” through a broker, bank or other holder of record, you must provide the record holder of your shares or depositary shares with instructions on how to vote your shares or depositary shares. Please follow the voting instructions provided by the broker or bank. You may not vote shares held in street name by returning a proxy card directly to MB Financial or by voting in person at the special meeting unless you provide a “legal proxy,” which you must obtain from your broker, bank or other nominee. Further, brokers, banks or other nominees who hold shares of MB Financial stock on behalf of their customers may not give a proxy to MB Financial to vote those shares with respect to any of the proposals without specific instructions from their customers, as brokers, banks and other nominees do not have discretionary voting power on these matters. Therefore, if you hold shares of MB Financial common stock, or depositary shares representing interests in MB Financial preferred stock, in street name and do not instruct your broker, bank or other nominee on how to vote your shares or depositary shares, your broker, bank or other nominee will not vote your shares or depositary shares on any proposal on which you are entitled to vote. In the case of the preferred stockholder merger proposal, the common stockholder merger proposal or the charter amendment proposal, this will have the same effect as a vote cast “AGAINST” the proposal. In the case of the merger-related compensation proposal, the common stockholder adjournment proposal or the preferred stockholder adjournment proposal, this will have no effect on the proposal.

Shares Held Through MB Financial 401(k) Profit Sharing Plan

If you hold shares of MB Financial common stock through the MB Financial 401(k) profit sharing plan, you are entitled to instruct the plan trustee on how to vote the shares allocated to your plan account. Plan shares for which voting instructions are not received, or are not timely received, by the plan trustee will be voted in the same proportion as the shares for which timely voting instructions are received by the plan trustee. Refer to the voting instructions form for your plan shares for additional information, including the deadline for submitting your voting instructions.

Revocability of Proxies/Voting Instructions and Changes to a Vote

If you are a holder of record of MB Financial common stock and have submitted your proxy and would like to revoke your proxy, you may do so before your shares are voted at the special meeting by: (i) filing a notice with the Corporate Secretary of MB Financial revoking your proxy, (ii) filing a new, subsequently dated proxy card (whether by proxy card online or by telephone) or (iii) by attending the special meeting and voting your shares in person. Your presence at the special meeting alone will not revoke your proxy. If you have instructed a broker,

 

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bank or other nominee to vote your shares or depositary shares, you must follow the directions you receive from your broker, bank or other nominee in order to change or revoke your vote.

Unless so revoked, the shares and depositary shares represented by such proxies and voting instructions will be voted at the special meeting and all adjournments or postponements of the special meeting.

Solicitation of Proxies and Voting Instructions

The cost of solicitation of proxies and voting instructions for the special meeting will be borne by MB Financial. MB Financial will reimburse brokerage firms and other custodians, nominees and fiduciaries for reasonable expenses incurred by them in sending materials to the beneficial owners of common stock and depositary shares. MB Financial has retained D.F. King to assist in the solicitation of proxies and voting instructions for a fee of approximately $10,000 plus related fees for any additional services and reasonable out-of-pocket expenses. In addition to solicitations by mail, MB Financial’s directors, officers and regular employees may solicit proxies and voting instructions personally or by telephone without additional compensation.

Attending the Special Meeting

All holders of MB Financial common stock and depositary shares representing interests in MB Financial preferred stock as of the record date, or their duly appointed proxies, may attend the special meeting.

If your shares of MB Financial common stock or depositary shares representing interests in MB Financial preferred stock are held in “street name” in a stock brokerage account or by a bank or nominee and you wish to attend the special meeting, please bring evidence of your beneficial ownership of your shares or depositary shares (e.g., a copy of a recent brokerage statement showing the shares or depositary shares) and valid photo identification with you to the special meeting. If you intend to vote shares of MB Financial common stock in person at the special meeting and you own your shares in street name, you also are required to bring to the special meeting a legal proxy from your broker, bank or other intermediary. While holders of depositary shares representing interests in MB Financial preferred stock may attend the special meeting, they may not vote such depositary shares in person at the special meeting; such depositary shares may only be voted by providing voting instructions to the depositary, and the depositary will vote the shares of MB Financial preferred stock represented thereby in accordance with such instructions.

 

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MB FINANCIAL PROPOSALS

Preferred Stockholder Merger Proposal, Common Stockholder Merger Proposal and Charter Amendment Proposal

General. As discussed elsewhere in this proxy statement/prospectus, the holders of MB Financial preferred stock will consider and vote on a proposal, which we have defined as the preferred stockholder merger proposal, to approve the direct merger, which we have defined as the merger of MB Financial with and into Intermediary, a wholly-owned subsidiary of Fifth Third, with Intermediary surviving the direct merger. The holders of MB Financial common stock will separately vote on a proposal, which we have defined as the common stockholder merger proposal, to approve the merger, whether effected as the direct merger or as the alternative merger. We have defined the alternative merger as the merger of a newly-formed subsidiary of Fifth Third with and into MB Financial, with MB Financial surviving that merger. Only if the direct merger is not approved by the MB Financial preferred stockholders will the alternative merger occur instead of the direct merger, if the applicable common stockholder approvals for the alternative merger and the charter amendment described below are obtained. The holders of MB Financial common stock will separately vote on a proposal, which we have defined as the charter amendment proposal, to approve the charter amendment, which we have defined as an amendment to the charter of MB Financial and the articles supplementary to the charter of MB Financial relating to the MB Financial preferred stock that would give the holders of MB Financial preferred stock the right to vote with the holders of MB Financial common stock as a single class on all matters submitted to a vote of such common stockholders, to become effective immediately prior to completion of the alternative merger in the event the holders of MB Financial preferred stock do not approve the preferred stockholder merger proposal.

For the preferred stockholder merger proposal, holders of MB Financial preferred stock may vote “FOR,” “AGAINST” or “ABSTAIN,” and for each of the common stockholder merger proposal and the charter amendment proposal, holders of MB Financial common stock may vote FOR,” “AGAINST” or “ABSTAIN.” An abstention or failure to vote on these proposals will have the same effect as a vote cast “AGAINST” such proposals. If you hold depositary shares representing interests in MB Financial preferred stock or shares of MB Financial through a broker, bank or other nominee and you do not instruct your broker, bank or other nominee on how to vote your depositary shares or shares on the these proposals, as applicable, your broker, bank or other nominee will not vote your depositary shares or shares on the applicable proposal, which will have the same effect as a vote cast “AGAINST” such proposal.

The MB Financial Board of Directors recommends that holders of MB Financial preferred stock vote “FOR” the preferred stockholder merger proposal and that holders of MB Financial common stock vote “FOR” the common stockholder merger proposal and “FOR” the charter amendment proposal.

The merger cannot be completed unless MB Financial common stockholders approve the common stockholder merger proposal and, if the MB Financial preferred stockholders fail to approve the preferred stockholder merger proposal, the charter amendment proposal. Therefore, it is essential that MB Financial common stockholders approve both the common stockholder merger proposal and the charter amendment proposal to ensure the merger can be completed in the event the MB Financial preferred stockholders fail to approve the preferred stockholder merger proposal.

Charter Amendment. As indicated above, the charter amendment would amend the charter of MB Financial (specifically, Section C of Article 5 of the charter) and the articles supplementary to the charter of MB Financial relating to the MB Financial preferred stock (specifically, Sections 6(a) and 6(d) of Annex A to the articles supplementary) to give the holders of MB Financial preferred stock the right to vote with the holders of MB Financial common stock as a single class on all matters submitted to a vote of such common stockholders, with the holders of MB Financial preferred stock being entitled to 24 votes for each share of MB Financial preferred stock. If approved by the MB Financial common stockholders, the charter amendment will not become effective until immediately prior to completion of the alternative merger, following the filing of articles of amendment

 

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with the Department of Assessments and Taxation of the State of Maryland. As noted above, the alternative merger will occur instead of the direct merger if and only if the MB Financial preferred stockholders fail to approve the preferred stockholder merger proposal.

Upon completion of the alternative merger, MB Financial will be a subsidiary of Fifth Third, who will control MB Financial. MB Financial preferred stockholders will vote with Fifth Third as a single class on all matters submitted to a vote of Fifth Third, as the sole common stockholder of MB Financial following completion of the alternative merger. Thus, the voting rights that would be conferred upon the MB Financial preferred stockholders by the charter amendment would continue to apply with respect to MB Financial, and not Fifth Third, following completion of the alternative merger. Approval of the charter amendment proposal is necessary to obtain required tax opinions in the event the alternative merger will occur instead of the direct merger. See “Material United States Federal Income Tax Consequences of the Merger” beginning on page 99.

The text of the proposed charter amendment is set forth in Appendix C to this proxy statement/prospectus. The above description of the charter amendment is qualified in its entirety by reference to the text of the proposed charter amendment.

Merger-Related Compensation Proposal

Pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and Rule 14a-21(c) under the Exchange Act, MB Financial is seeking non-binding, advisory approval from the holders of MB Financial common stock of the compensation of MB Financial’s named executive officers that is based on or otherwise relates to the merger as disclosed in “The Merger—Merger-Related Compensation for MB Financial’s Named Executive Officers” beginning on page 75. The proposal gives holders of MB Financial common stock the opportunity to express their views on the merger-related compensation of MB Financial’s named executive officers. Accordingly, MB Financial is requesting holders of MB Financial common stock to adopt the following resolution, on a non-binding, advisory basis:

“RESOLVED, that the compensation that may be paid or become payable to MB Financial’s named executive officers, in connection with the merger, and the agreements or understandings pursuant to which such compensation may be paid or become payable, in each case as disclosed pursuant to Item 402(t) of Regulation S-K in “The Merger—Merger-Related Compensation for MB Financial’s Named Executive Officers,” are hereby APPROVED.”

The vote on this proposal is a vote separate and apart from the votes of the common stockholders to approve the common stockholder merger proposal and the charter amendment proposal. Accordingly, a holder of MB Financial common stock may vote not to approve this proposal on merger-related compensation and benefits to be paid or provided to named executive officers of MB Financial and vote to approve the common stockholder merger proposal and the charter amendment proposal and vice versa. The vote is advisory in nature and, therefore, is not binding on MB Financial or on Fifth Third or the Boards of Directors or the compensation committees of MB Financial or Fifth Third, regardless of whether the other proposals are approved. Approval of the non-binding, advisory proposal with respect to the compensation that may be received by MB Financial’s named executive officers in connection with the merger is not a condition to completion of the merger, and failure to approve this advisory matter will have no effect on the votes of the common stockholders to approve the common stockholder merger proposal or the charter amendment proposal. The merger-related compensation to be paid to named executive officers in connection with the merger is based on contractual arrangements with the named executive officers and, accordingly, the outcome of this advisory vote will not affect the obligation to make these payments.

For the merger-related compensation proposal, holders of MB Financial common stock may vote “FOR,” “AGAINST” or “ABSTAIN.” Holders of MB Financial preferred stock are not entitled to vote on this proposal. If you hold shares of MB Financial common stock and your shares are not present at the special meeting, it will

 

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have no effect on the merger-related compensation proposal (assuming a quorum is present). If you abstain, your abstention will have no effect on the merger-related compensation proposal, although it will be counted toward establishing a quorum. If you hold shares of MB Financial common stock through a broker, bank or other nominee and you do not instruct your broker, bank or other nominee on how to vote your shares on the merger-related compensation proposal, your broker, bank or other nominee will not vote your shares on the merger-related compensation proposal, which will have no effect on the vote count for such proposal.

The MB Financial Board of Directors recommends that holders of MB Financial common stock vote “FOR” the merger-related compensation proposal.

Preferred Stockholder Adjournment Proposal and Common Stockholder Adjournment Proposal

The special meeting may be adjourned to another time or place, if necessary or appropriate, to permit further solicitation of proxies from the holders of MB Financial preferred stock in favor of the preferred stockholder merger proposal or from the holders of MB Financial common stock in favor of the common stockholder merger proposal and/or the charter amendment proposal.

If, at the special meeting, the number of shares of MB Financial preferred stock present in person or represented by proxy and voting in favor of the preferred stockholder merger proposal is insufficient to approve the preferred stockholder merger proposal, MB Financial may move to adjourn the special meeting in order to enable the MB Financial Board of Directors to solicit additional proxies for the approval of the preferred stockholder merger proposal. Likewise, if the number of shares of MB Financial common stock present in person or represented by proxy and voting in favor of the common stockholder merger proposal and/or the charter amendment proposal is insufficient to approve the common stockholder merger proposal and/or the charter amendment proposal, MB Financial may move to adjourn the special meeting in order to enable the MB Financial Board of Directors to solicit additional proxies for the approval of the common stockholder merger proposal and/or the charter amendment proposal.

In the preferred stockholder adjournment proposal, MB Financial is asking its preferred stockholders to authorize the holder of any proxy solicited by the MB Financial Board of Directors to vote in favor of granting discretionary authority to the proxy holders, and each of them individually, to adjourn the special meeting to another time and/or place for the purpose of soliciting additional proxies from the holders of MB Financial preferred stock for approval of the preferred stockholder merger proposal. In the common stockholder adjournment proposal, MB Financial is asking its common stockholders to authorize the holder of any proxy solicited by the MB Financial Board of Directors to vote in favor of granting discretionary authority to the proxy holders, and each of them individually, to adjourn the special meeting to another time and/or place for the purpose of soliciting additional proxies from the holders of MB Financial common stock for approval of the common stockholder merger proposal and/or the charter amendment proposal. If the preferred stockholder adjournment proposal is approved and/or the common stockholder adjournment proposal is approved, MB Financial could adjourn the special meeting and any adjourned session of the special meeting and use the additional time to solicit additional proxies from the preferred stockholders and/or the common stockholders, as the case may be, including the solicitation of proxies from stockholders who have previously voted. MB Financial does not intend to call a vote on adjournment of the special meeting to solicit additional proxies if the common stockholder merger proposal is approved at the special meeting and either the preferred stockholder merger proposal is approved at the special meeting or the charter amendment proposal is approved at the special meeting. Pursuant to the merger agreement, MB Financial is required to adjourn or postpone the special meeting to solicit additional proxies if it has not received proxies representing a sufficient number of votes for the stockholder approvals needed to complete the merger.

For the preferred stockholder adjournment proposal and the common stockholder adjournment proposal, holders of MB Financial preferred stock and MB Financial common stock may vote “FOR,” “AGAINST” or “ABSTAIN.” Shares not present in person or by proxy at the special meeting will have no effect on the preferred

 

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stockholder adjournment proposal or the common stockholder adjournment (assuming a quorum is present). An abstention will have no effect on the preferred stockholder adjournment proposal or the common stockholder adjournment proposal, although it will be counted toward establishing a quorum. If you hold depositary shares or shares through a broker, bank or other nominee and you do not instruct your broker, bank or other nominee on how to vote your depositary shares or shares on the preferred stockholder adjournment proposal or the common stockholder adjournment proposal, your broker, bank or other nominee will not vote your depositary shares or shares on the applicable adjournment proposal, which will have no effect on the vote count for such proposal.

The MB Financial Board of Directors unanimously recommends that MB Financial preferred stockholders vote “FOR” the preferred stockholder adjournment proposal (if necessary or appropriate) and that MB Financial common stockholders vote “FOR” the common stockholder adjournment proposal (if necessary or appropriate).

 

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INFORMATION ABOUT THE COMPANIES

Fifth Third

38 Fountain Square Plaza

Cincinnati, Ohio 45263

Phone: (800) 972-3030

Fifth Third Bancorp is an Ohio business corporation that is registered as a bank holding company under the Bank Holding Company Act of 1956, as amended, and has elected to be treated as a financial holding company under the Gramm-Leach-Bliley Act of 1999 and regulations of the Board of Governors of the Federal Reserve System. Fifth Third was organized in 1975. As of March 31, 2018 Fifth Third had consolidated total assets of $142 billion and total deposits of $105.5 billion. Fifth Third and its subsidiaries had 18,125 full-time equivalent employees as of December 31, 2017.

Fifth Third is the parent holding company for Fifth Third Bank, its principal subsidiary, through which most of its banking services are provided. Through Fifth Third Bank and certain other subsidiaries, Fifth Third provides a wide range of services, including checking, savings and money market accounts, wealth management solutions, payments and commerce solutions, insurance services and credit products such as commercial loans and leases, mortgage loans, credit cards, installment loans, and auto loans to individual, corporate, and institutional clients. Fifth Third serves individuals and businesses through its commercial banking, branch banking, consumer lending, and wealth & asset management businesses. These products and services are provided through 1,153 full-service banking centers and 2,469 Fifth Third-branded ATMs located throughout ten states: Florida, Georgia, Illinois, Indiana, Kentucky, Michigan, North Carolina, Ohio, Tennessee and West Virginia.

Fifth Third Financial Corporation

38 Fountain Square Plaza

Cincinnati, Ohio 45263

Phone: (800) 972-3030

Intermediary is an Ohio corporation and a wholly-owned subsidiary of Fifth Third. Intermediary was incorporated in 2001 and serves as the intermediary holding company for all of Fifth Third’s subsidiaries, including Fifth Third Bank, its principal subsidiary.

MB Financial, Inc.

800 West Madison Street

Chicago, Illinois 60607

Phone: (888) 422-6562

MB Financial is a Maryland corporation and a financial holding company and a bank holding company under the Bank Holding Company Act of 1956, as amended. Its primary market is the Chicago metropolitan area, in which it operates 86 banking offices through its bank subsidiary, MB Financial Bank. Through MB Financial Bank, MB Financial offers a broad range of financial services, primarily to small and middle market businesses and individuals in the markets that it serves. As of March 31, 2018, on a consolidated basis, MB Financial had total assets of $20.2 billion, total deposits of $15.0 billion, stockholders’ equity of $2.9 billion, and client assets under management or advisement of $8.2 billion in its wealth management group (including $3.1 billion in its trust department and $5.1 billion in its bank-owned investment management firm, MSA Holdings, LLC, the parent company of its registered investment advisors, MainStreet Investment Advisors, LLC and Cedar Hill Associates LLC).

 

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MB Financial’s business segments currently consist of banking, leasing and mortgage banking. Lines of business within the banking segment include commercial banking, loans to leasing companies, retail banking, cards and bank sponsorships, and wealth management. The leasing segment provides a full spectrum of lease and equipment finance solutions and related services to a wide variety of businesses on a national basis. In April 2018, MB Financial reported that it planned to discontinue its national residential mortgage origination business. MB Financial plans to stop operating its mortgage business as a defined segment prior to the fourth quarter of 2018. MB Financial also plans to continue originating residential mortgage loans in the greater Chicago area and to retain its mortgage servicing asset as well as its mortgage servicing operation in Wilmington, Ohio. In addition, MB Financial plans to continue holding residential mortgage loans on its balance sheet.

 

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THE MERGER

The following is a discussion of the merger and the material terms of the merger agreement between Fifth Third and MB Financial. You are urged to read carefully the merger agreement in its entirety, a copy of which is attached as Appendix A to this proxy statement/prospectus and incorporated by reference herein. This summary does not purport to be complete and may not contain all of the information about the merger agreement that is important to you. We encourage you to read the merger agreement carefully and in its entirety. This section is not intended to provide you with any factual information about Fifth Third or MB Financial. Such information can be found elsewhere in this proxy statement/prospectus and in the public filings Fifth Third and MB Financial make with the SEC. See “Where You Can Find More Information” in the forepart of this proxy statement/prospectus.

Terms of the Merger

Transaction Structure

Fifth Third’s, Intermediary’s and MB Financial’s Boards of Directors have approved the merger agreement and the merger. If the direct merger is approved by MB Financial’s common stockholders and preferred stockholders, then the merger agreement provides for the acquisition of MB Financial through the merger of MB Financial with and into Intermediary, with Intermediary continuing as the surviving corporation.

The merger agreement also provides that if the holders of MB Financial preferred stock do not approve the direct merger, but the holders of MB Financial common stock approve the alternative merger and charter amendment, then the acquisition of MB Financial will instead be effected by the merger of a newly-formed subsidiary of Fifth Third with and into MB Financial, with MB Financial surviving the alternative merger. Only if the direct merger is not approved by the MB Financial preferred stockholders will the alternative merger occur instead of the direct merger, if the applicable common stockholder approvals for the alternative merger and charter amendment are obtained.

Pursuant to the merger agreement, Fifth Third may at any time change the method of effecting the combination of Fifth Third and MB Financial. However, no such change may (i) alter or change the amount or kind of the merger consideration or the number of shares of Fifth Third common stock to be received by MB Financial’s common stockholders, (ii) adversely affect the tax treatment of Fifth Third shareholders or MB Financial stockholders, (iii) adversely affect the tax treatment of MB Financial or (iv) materially impede or delay the consummation of the merger.

Merger Consideration

Each share of MB Financial common stock issued and outstanding immediately prior to the effective time of the merger (other than shares owned by MB Financial or Fifth Third), will be converted into the right to receive 1.45 Fifth Third common shares and $5.54 in cash. In the direct merger, each share of MB Financial preferred stock issued and outstanding immediately prior to the effective time of the direct merger will automatically be converted into a share of new Fifth Third preferred stock. The new Fifth Third preferred stock will have substantially similar terms as the MB Financial preferred stock, except that the new Fifth Third preferred stock will have no voting rights (including upon an arrearage in the payment of dividends) except as required by Ohio law and will have certain other differences consistent with Fifth Third’s currently outstanding series of preferred stock and its articles of incorporation.

In the alternative merger, the holders of MB Financial common stock will receive the same merger consideration on the same terms as in the direct merger, but the MB Financial preferred stock will not be converted into a share of the new Fifth Third preferred stock and will instead remain outstanding and unchanged (except as noted in the next sentence) as preferred stock of MB Financial, which will be a subsidiary of Fifth Third. Pursuant to the

 

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charter amendment, effective immediately prior to consummation of the alternative merger, the holders of MB Financial preferred stock will have the right to vote with the holders of MB Financial common stock as a single class on all matters submitted to a vote of such common stockholders. Upon completion of the alternative merger, MB Financial will be a subsidiary of Fifth Third, who will control MB Financial as the sole holder of MB Financial common stock. MB Financial preferred stockholders will vote with Fifth Third as a single class on all matters submitted to a vote of Fifth Third, as the sole common stockholder of MB Financial following completion of the alternative merger. Thus, the voting rights that would be conferred upon the MB Financial preferred stockholders by the charter amendment would continue to apply with respect to MB Financial, and not Fifth Third, following completion of the alternative merger.

Conversion of Shares; Exchange and Payment Procedures

At or prior to the closing, Fifth Third will deposit or cause to be deposited with an exchange agent designated by Fifth Third and reasonably acceptable to MB Financial, for the benefit of the holders of shares of MB Financial common stock and MB Financial preferred stock, sufficient cash and Fifth Third common shares and, if issuable, new Fifth Third preferred stock to be exchanged in accordance with the merger agreement, including the merger consideration and payment of cash in lieu of fractional shares.

The conversion of MB Financial common stock into the right to receive the merger consideration and the conversion of the MB Financial preferred stock into the new Fifth Third preferred stock, if issuable, will occur automatically at the effective time of the merger. As promptly as practicable after the effective time of the merger, the exchange agent will exchange certificates representing shares of MB Financial common stock and, if applicable, MB Financial preferred stock for the merger consideration or new Fifth Third preferred stock to be received in the merger pursuant to the terms of the merger agreement.

Letters of Transmittal

As promptly as practicable after the effective time of the merger, but in any event within ten days thereafter, the exchange agent will send a letter of transmittal to only those persons who were MB Financial stockholders immediately prior to the effective time of the merger. This mailing will contain instructions on how to surrender shares of MB Financial common stock and, if applicable, MB Financial preferred stock in exchange for the merger consideration or new Fifth Third preferred stock the holder is entitled to receive under the merger agreement. From and after the effective time, MB Financial common stockholders who properly surrender their certificates or book entry shares to the exchange agent, together with a properly completed and duly executed letter of transmittal, and such other documents as may be required pursuant to such instructions, will receive for each share of MB Financial common stock 1.45 Fifth Third common shares, $5.54 in cash plus any cash payable in lieu of any fractional shares of Fifth Third common shares, and any dividends or distributions such holder has the right to receive pursuant to the merger agreement. No interest will be paid or accrue on any merger consideration or cash in lieu of fractional shares. From and after the effective time of the direct merger, MB Financial preferred stockholders who properly surrender their certificates or book entry shares to the exchange agent, together with a properly completed and duly executed letter of transmittal, and such other documents as may be required pursuant to such instructions, will receive for each share of MB Financial preferred stock a share of the new Fifth Third preferred stock and any dividends or distributions such holder has the right to receive pursuant to the merger agreement.

In the alternative merger, the MB Financial preferred stock will not be converted into a share of the new Fifth Third preferred stock and will instead remain outstanding as preferred stock of MB Financial, which will be a subsidiary of Fifth Third.

Dividends and Distributions

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respect to Fifth Third common shares or new Fifth Third preferred stock into which shares of MB Financial common stock or preferred stock may have been converted will accrue but will not be paid. Fifth Third will pay to former MB Financial stockholders any unpaid dividends or other distributions, without interest, only after they have duly surrendered their MB Financial stock certificates or book entry shares. After the effective time of the merger, there will be no transfers on the stock transfer books of MB Financial of any shares of MB Financial common stock or MB Financial preferred stock. If certificates representing shares of MB Financial common stock or preferred stock, if applicable, or book entry shares are presented for transfer after the effective time of the merger, they will be cancelled and exchanged for the merger consideration or new Fifth Third preferred stock, if issuable, into which the shares of MB Financial common stock or MB Financial preferred stock represented by that certificate or book entry share have been converted.

Dissenting Shares

Under the Maryland General Corporation Law, the holders of MB Financial common stock and preferred stock will not have any appraisal rights with respect to the merger.

Lost, Stolen or Destroyed Stock Certificates

If a certificate for MB Financial common stock or preferred stock has been lost, stolen or destroyed, the exchange agent will issue the merger consideration or new Fifth Third preferred stock, if issuable, properly payable under the merger agreement upon receipt of appropriate evidence as to that loss, theft or destruction, appropriate evidence as to the ownership of that certificate by the claimant, and appropriate and customary indemnification.

Background of the Merger

As part of their efforts to enhance long-term value for their respective companies’ stockholders and other constituencies, the Boards of Directors of MB Financial and Fifth Third have periodically evaluated the strategic direction and business objectives of their respective companies. This process has entailed consideration of, among other things, strategic growth opportunities, the regulatory environment for financial institutions, economic and financial market conditions, competition, as well as consolidation and other developments in the financial services industry.

It was in this context that Mitchell Feiger, President and Chief Executive Officer of MB Financial, met with Gregory Carmichael, President and Chief Executive Officer of Fifth Third, and Timothy Spence, Executive Vice President of Payments, Strategy and Digital Solutions of Fifth Third, on May 6, 2016 at Mr. Spence’s suggestion. At this introductory meeting, the executives discussed the history, cultures and business models of their respective companies. While the possibility of a strategic business combination was not discussed, the executives agreed to meet again in the future to learn more about each other’s company. At the MB Financial Board of Directors meeting on May 25, 2016, Mr. Feiger briefed the board on his meeting with Messrs. Carmichael and Spence.

On September 12, 2017, Messrs. Feiger and Spence met again in Mr. Feiger’s office. Similar to the meeting in 2016, they discussed their respective companies and their strategies, with a specific emphasis on the Chicago banking environment and on some of MB Financial’s specialty business lines, but a specific business combination transaction was not discussed. They agreed to continue the dialogue to learn more about each other’s company. At the MB Financial Board of Directors meeting on September 27, 2017, Mr. Feiger briefed the MB Financial Board of Directors on his meeting with Mr. Spence.

On October 25 through October 27, 2017, the MB Financial Board of Directors had its annual board strategic planning retreat. On October 25, 2017, a representative from Sandler O’Neill attended a portion of the retreat to discuss with the board a wide range of topics including the current U.S. economic outlook, the bank operating

 

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environment and M&A outlook, potential acquirors of MB Financial, potential merger of equals candidates and potential acquisition targets for MB Financial. The board’s takeaway from the discussion was that the best opportunities for MB Financial in the near term would be to continue its organic growth and profit improvement strategies as well as opportunistically acquire smaller banking institutions with high quality deposit bases in the Chicago market or in the payments, cards or specialty finance businesses.

On November 22, 2017, Messrs. Carmichael, Spence and Feiger, together with Tayfun Tuzun, Executive Vice President and Chief Financial Officer of Fifth Third, met for dinner. Similar to prior meetings, the executives discussed their respective companies. In addition, the Fifth Third executives discussed the potential strategic benefits of a combination between MB Financial and Fifth Third. Mr. Carmichael expressed to Mr. Feiger Fifth Third’s desire to proceed with discussions for a potential strategic combination and suggested that Mr. Feiger travel to Fifth Third’s corporate headquarters in Cincinnati, Ohio to meet the Fifth Third executive management team and learn more about Fifth Third. At the MB Financial Board of Directors meeting on December 13, 2017, Mr. Feiger briefed the board on the dinner meeting, including Fifth Third’s expression of interest in discussing a potential business combination transaction, and received approval for him and Mark Hoppe, President and Chief Executive Officer of MB Financial Bank, to visit Fifth Third.

On December 19, 2017, the Fifth Third board held a regularly scheduled meeting and the discussion included potential acquisition partners, including MB Financial, and the strategic benefits and financial considerations of potential acquisitions.

On February 20, 2018, Messrs. Feiger and Hoppe visited Fifth Third headquarters and met with several members of the Fifth Third senior management team. The executives reviewed in detail many of the strategic benefits of a combination including the unique opportunity to create a leading Chicago bank, the benefits of combining their respective businesses and the complementary nature of many of their respective business segments. In addition, the executives noted that the two organizations have a similar customer focus and complementary cultures. Furthermore, considering the overlap of the branch networks and certain back office functions, the executives believed that the potential expense synergies in a merger would be significant. While Fifth Third did not discuss a specific purchase price, its executives did provide their thoughts on an initial framework for a potential combination. Mr. Feiger and Mr. Hoppe reported on this meeting to MB Financial’s Board of Directors on February 28, 2018 and provided board members with the Fifth Third discussion materials that were reviewed. After a discussion regarding the potential strategic benefits of a potential combination with Fifth Third, the board authorized Mr. Feiger to continue discussions with Fifth Third.

On February 27, 2018, the Fifth Third board met and the board continued its prior discussion of potential acquisition partners, including MB Financial, with a review of the strategic benefits of potential acquisitions and the opportunity to create shareholder value for Fifth Third’s shareholders.

On March 1, 2018, MB Financial and Fifth Third entered into a mutual non-disclosure agreement and Mr. Feiger and Mr. Spence spoke telephonically to update each other on their recent board meetings. Both executives noted that their respective boards recognized the strategic benefits of a potential combination and approved continuing discussions and bringing in selected executives from each side. At such time, Mr. Feiger advised Mr. Spence that if Fifth Third decided to propose a transaction that would attract interest from the MB Financial Board of Directors, then MB Financial would also assess the interest of other parties in a possible acquisition.

On March 5, 2018, Mr. Feiger and Jill York, Executive Vice President of Specialty Banking and M&A of MB Financial, spoke by telephone with Mr. Spence, James Leonard, Treasurer of Fifth Third, and Saema Somalya, Deputy General Counsel of Fifth Third. The discussion primarily covered a proposed timeline to permit Fifth Third to form an initial view on transaction economics and the items that each side would provide for preliminary due diligence and preliminary reverse due diligence. In addition, the executives scheduled a dinner meeting in Rosemont, Illinois and strategy session for management to share more detailed information about their respective businesses.

 

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On March 10, 2018, MB Financial and Fifth Third provided each other with access to a secure data site for the commencement of due diligence by Fifth Third and reverse due diligence by MB Financial.

On March 14, 2018, Mr. Feiger had a previously scheduled meeting with the senior management team of another potential interested party, which we refer to as “Party A.” At the meeting, the Chief Executive Officer of Party A indicated that Party A would be interested in acquiring MB Financial if it ever were to consider a sale.

On March 14, 2018, members of the senior management of MB Financial, Fifth Third and their respective banking subsidiaries had a dinner meeting in Rosemont, Illinois. The following day the discussions continued in person and covered a wide range of topics including a review of each company’s retail, wealth management, mortgage, commercial banking and leasing business lines, as well as critical risk functions, risk appetite, financial performance, culture and core values. The MB Financial senior management team came away from the discussion with a view that the culture and core values of the companies were compatible and there was strategic merit to continuing discussions.

On March 16, 2018, Mr. Spence had a follow up discussion with Ms. York to provide additional information on Fifth Third’s payments business. Mr. Spence and Ms. York also exchanged feedback from the March 14 and 15, 2018 meetings. Key takeaways were that the two companies managed risk in a similar way, that in addition to significant cost synergies, there were significant revenue enhancement opportunities and that the dialogue in the meetings was collaborative.

On March 23, 2018, Mr. Feiger and Ms. York had a follow up telephone call with Messrs. Carmichael, Spence, Tuzun and Leonard to discuss Fifth Third’s feedback from the management meetings and their initial view on transaction economics based on the preliminary due diligence information. Mr. Carmichael shared that they were very positive on the opportunity and that a combined company would have a much more attractive presence in Chicago. While there was significant information left to review, Fifth Third provided its initial views on a pricing framework for a transaction, which included an illustrative 15% premium to MB Financial’s common stock trading price. Mr. Feiger and Ms. York asked questions regarding some of the assumptions included in the Fifth Third analysis and provided some suggestions for additional financial analysis which might help Fifth Third increase its pricing. Over the following week, Ms. York and Mr. Leonard continued to share information in order to refine the assumptions used by both sides in their financial analysis of a potential transaction.

On March 28, 2018, Mr. Feiger, Ms. York, Mr. Tuzun and Mr. Leonard had a telephone call to discuss their respective financial models with the objective of gaining an understanding of each side’s assumptions. Specific assumptions such as cost savings, transaction-related costs, estimated core deposit intangible and other purchase accounting estimates were reviewed. In addition, Mr. Spence, Mr. Carmichael and Mr. Feiger continued to discuss the purchase price premium framework and assumptions.

On March 29, 2018, Mr. Feiger had a telephone call with Mr. Carmichael, who reiterated Fifth Third’s desire to consummate a transaction with MB Financial given the strategic benefits and indicated that Fifth Third could pay a 25% market premium and would add one MB Financial director to its board of directors. Later that evening, the MB Financial Board of Directors held a conference call meeting to discuss the status of the discussions with Fifth Third. Mr. Feiger and Ms. York provided an update regarding the recent discussions, a summary of potential transaction economics and a comparison to MB Financial’s standalone internal projections under various interest rate scenarios. The potential transaction analyses were prepared using a premium of 25% to MB Financial’s current common stock price. The MB Financial Board of Directors engaged in a robust discussion and concluded that senior management should continue discussions with Fifth Third and requested that MB Financial’s financial advisor, Sandler O’Neill, assist with MB Financial’s evaluation of a potential transaction with Fifth Third and MB Financial’s other strategic alternatives.

On March 30, 2018, Mr. Feiger, Ms. York and Randall Conte, Chief Operating Officer and Chief Financial Officer of MB Financial, shared with representatives of Sandler O’Neill relevant financial information gathered up to that point in time, including key transaction assumptions.

 

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On April 12, 2018, Mr. Feiger met with members of senior management of Party A. After discussing the banking business generally, and segments of MB Financial’s banking business specifically, Party A representatives indicated an interest in commencing a dialogue regarding a possible acquisition of MB Financial. Mr. Feiger indicated that he would discuss Party A’s possible interest in a transaction with the MB Financial Board of Directors and provide the board’s response to Party A.

On April 14, 2018, Ms. York had a telephone conversation with Mr. Leonard and representatives from Fifth Third’s financial advisor. The purpose of the call was to discuss certain financial assumptions relating to MB Financial’s future performance.

On April 19, 2018, Mr. Feiger spoke by telephone with the head of corporate strategy of Party A, who indicated that while Party A would like to move forward with acquisition discussions, Party A would prefer to wait until the summer which would be better timing for Party A.

On April 20, 2018, Messrs. Feiger and Spence had a phone call to discuss transaction terms. Mr. Spence indicated that Fifth Third would be willing to offer a 25% market premium, which equated to an implied price of $53.03 per MB Financial common share based on the prior day’s closing price of Fifth Third common stock. The consideration would be all stock or, at MB Financial’s election, up to 10% in cash. Fifth Third also re-affirmed its offer to add one MB Financial director to its board of directors.

On April 21, 2018, the MB Financial Board of Directors convened a telephonic meeting. All board members were in attendance as well as representatives of Sandler O’Neill and a representative of the law firm of Silver, Freedman, Taff & Tiernan LLP, which we refer to as “Silver Freedman.” At the meeting, representatives of Sandler O’Neill reviewed with the MB Financial Board of Directors the financial aspects of Fifth Third’s 25% premium to market pricing proposal, in an all-stock transaction, based on various financial metrics, as well as the potential capacity to pay of Fifth Third and certain other institutions, including Party A, based on publicly available information. Sandler O’Neill observed that the proposed pricing in Fifth Third’s offer was at the higher end of pricing ranges for recent transactions. Sandler O’Neill also concluded that the proposed pricing reflected serious interest on the part of Fifth Third to complete a transaction with MB Financial. After discussion, including an update on the possible interest of Party A, the MB Financial Board of Directors instructed senior management to continue discussions with Fifth Third and to contact Party A to determine whether Party A would be interested in pursuing a potential transaction at this time. The MB Financial Board of Directors also instructed Sandler O’Neill to contact two other parties, including Party B (selected in consultation with Sandler O’Neill based on their size and expected ability to pay a transaction premium as well as their potential level of interest in pursuing a transaction with MB Financial), on a no names basis, to assess their interest in a possible transaction in the Midwest. After the board meeting, Mr. Feiger contacted the head of corporate strategy of Party A to determine whether Party A would be interested in pursuing a transaction with MB Financial, on an immediate and accelerated timetable. Party A’s representative confirmed Party A’s interest in a possible transaction, the parties entered into a mutual non-disclosure agreement and Party A was granted access to a secure data site to commence its due diligence.

From April 22, 2018 through May 17, 2018, Fifth Third continued its due diligence and Party A performed its due diligence on MB Financial, which included access to information on secure data sites, in person meetings and telephonic communications with MB Financial management. During this period MB Financial performed reverse due diligence on both Fifth Third and Party A.

On April 23, 2018, Sandler O’Neill contacted two other parties, including Party B, on a no names basis, to assess their interest in a possible commercial bank transaction in the Midwest. The contacted parties, including Party B initially, indicated that they would not be interested at the present time in pursuing a transaction due to timing issues among other factors.

On April 24, 2018, the members of the MB Financial Board of Directors received additional and updated information from Sandler O’ Neill for discussion relating to Fifth Third’s oral offer, which included, among other

 

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information, MB Financial’s standalone common stock implied value under various scenarios; a comparison of Fifth Third’s oral offer to recent transaction precedents and MB Financial’s standalone common stock implied value, potential market reaction based upon the earn back period of tangible book value dilution, and other potential benefits and risks associated with a transaction with Fifth Third; and the potential capacity to pay of Party A and Party B as well as the other parties considered by Sandler O’Neill in its assessment of possible interest by other suitors.

On April 25, 2017, the MB Financial Board of Directors held its regularly scheduled board meeting, which was also attended in person by representatives of Sandler O’Neill and a representative of Silver Freedman. The representatives of Sandler O’Neill discussed financial matters relating to MB Financial under various standalone scenarios and a possible transaction with Fifth Third. The directors and representatives of Sandler O’Neill also discussed a possible transaction with Party A, including, among other things, Party A’s apparent capacity to pay. Sandler O’Neill informed the board that Party A was expected to provide an oral indication of pricing and consideration mix by April 29, 2018. The representative of Silver Freedman reviewed with the directors the applicable legal standards in connection with the board’s review of potential strategic alternatives, including a potential merger. After further discussion, it was the consensus of the board that the oral offer provided by Fifth Third was sufficient to merit continuing the strategic discussions with Fifth Third, Party A and other possible suitors. At the conclusion of the meeting, the board instructed Silver Freedman to draft a form of definitive agreement for submission to interested parties.

During the evening of April 25, 2018, Mr. Feiger had dinner with Messrs. Carmichael, Tuzun and Spence and two independent directors of MB Financial. At the dinner meeting, the Fifth Third representatives shared their ideas for the combined company and reasons why Fifth Third would be a good partner for MB Financial. Before the meeting concluded, Mr. Feiger advised the Fifth Third representatives that he expected other interested parties to join the sale process.

On April 27, 2018, Party B contacted Sandler O’Neill to express its interest in a possible acquisition of a Midwestern commercial bank if the potential target was MB Financial. A draft mutual non-disclosure agreement was provided by MB Financial to Party B on the same day.

On April 28, 2018, Party A submitted its initial oral indication of pricing and consideration mix to MB Financial. The proposal provided for pricing of $54.00 per MB Financial common share with a cash component of $0.5 billion to $2.0 billion and the remaining consideration in Party A’s common stock. The exchange ratio for the stock portion of the consideration would be calculated prior to deal signing.

On April 29, 2018, the MB Financial Board of Directors held a telephonic meeting to discuss and evaluate Party A’s proposal. Sandler O’Neill presented updated materials to include an analysis of Party A’s indication of pricing and consideration mix. After a review of the Sandler O’Neill materials and a discussion of other potential benefits and risks of a transaction with Party A, the board authorized management to continue the pursuit of a possible transaction with both Fifth Third and Party A.

On April 30, 2018, Sandler O’Neill had discussions with the financial advisors to Fifth Third and Party A relating to the first draft of a definitive agreement. Each of Fifth Third and Party A indicated a preference for its outside counsel to prepare the initial draft, which in the case of Fifth Third had already been started by its counsel.

On May 1, 2018, Party B and MB Financial signed a mutual non-disclosure agreement and Party B was granted access to a secure data site to commence its due diligence on MB Financial.

From May 1, 2018 through May 13, 2018, Party B conducted due diligence on a secure data site and through communications with Sandler O’Neill and MB Financial management.

 

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On May 4, 2018, representatives of Silver Freedman had telephone conferences with outside counsel to each of Fifth Third and Party A relating to expectations with respect to the substance of the definitive agreement being drafted by each counsel and the timing for receipt of the initial draft.

On May 9, 2018, outside counsel to Party A provided an initial draft of a definitive agreement to Silver Freedman. From that point through May 16, 2018, Silver Freedman and outside counsel to Party A exchanged additional drafts of the definitive agreement and participated in discussions and negotiations relating thereto.

On the evening of May 10, 2018, the Fifth Third board met and discussed with management and Fifth Third’s advisors the potential transaction with MB Financial, including the potential strategic benefits and financial considerations. After full discussion, the board authorized management to proceed with further negotiations.

Thereafter on May 10, 2018, Simpson Thacher & Bartlett LLP, which we refer to as “Simpson Thacher,” counsel to Fifth Third, provided an initial draft of a definitive agreement to Silver Freedman. From that point through May 20, 2018, Silver Freedman and Simpson Thacher exchanged multiple revised drafts of the definitive agreement and participated in discussions and negotiations with respect to each draft.

On May 12, 2018, Sandler O’Neill spoke by phone with a representative of Party A and relayed to Party A MB Financial’s offer of the opportunity to speak with or present to the MB Financial Board of Directors. The representative of Party A notified Sandler O’Neill that they would consider MB Financial’s offer and would notify Sandler O’Neill if Party A decided to accept that invitation.

On May 14, 2018, Party B advised Sandler O’Neill that it would not be providing an indication of interest to acquire MB Financial due in large part to the expectation, based in part on its discussions with Sandler O’Neill, that transaction pricing would need to be well above precedent medians.

On the evening of May 14, 2018 and the morning of May 15, 2018, the Fifth Third board met and discussed with management and its advisors the status of the negotiations as well as the results of the ongoing due diligence review of MB Financial. At the conclusion of these meetings, the Fifth Third board authorized management to submit an updated proposal to MB Financial and enter into further negotiations with respect to a business combination transaction.

On May 15, 2018, Messrs. Carmichael, Tuzun and Spence made an in person presentation to members of the MB Financial Board of Directors relating to the strategic benefits of a combination between the parties and answered questions of the directors relating to Fifth Third and its business. At that meeting, Fifth Third provided pricing of a fixed exchange ratio of 1.427 shares of Fifth Third common stock plus $5.40 in cash for each MB Financial common share, representing an implied value of $53.95 per share based on Fifth Third’s closing price on May 14, 2018.

On May 15, 2018, in response to a request from Sandler O’Neill, on behalf of MB Financial, for updated pricing, Party A provided updated pricing and consideration mix of $54.00 per MB Financial common share with the cash component of the aggregate consideration being equal to $1.2 billion and the remainder of the aggregate consideration to be in Party A common stock based on an exchange ratio to be calculated and fixed prior to deal signing.

On May 16, 2018, the MB Financial Board of Directors held a meeting, which was also attended in person by representatives of Sandler O’Neill and representatives of Silver Freedman. Sandler O’Neill provided updated information and analysis relating to the competing offers of Fifth Third and Party A. After review and discussion of the updated information and analysis, it was the consensus of the board that the proposals of both Fifth Third and Party A presented MB Financial common stockholders with significant value when compared to MB Financial’s standalone valuation with its current strategy. The directors then discussed their views with respect to each proposal. A representative of Silver Freedman then reviewed with the directors their fiduciary duties under

 

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Maryland law with respect to their evaluation of the competing proposals. After a full discussion relating to both proposals, which included extensive dialogue by the board members with representatives of Sandler O’Neill, it was the consensus of the board that the Fifth Third proposal was the superior proposal based on the strength and potential upside of its common stock (and the greater percentage of its offer comprised of common stock, compared to Party A), as well as Fifth Third’s complementary business model and operating fit with MB Financial and greater opportunity for significant cost savings and synergies. The board then instructed Sandler O’Neill to solicit best and final offers from both parties, and to also request two seats on Fifth Third’s Board of Directors, reflecting the pro forma equity ownership of the MB Financial’s stockholders in the combined company. The meeting then adjourned with the understanding that it would be reconvened the same evening. At the reconvened meeting, representatives of Sandler O’Neill informed the board that Fifth Third was willing to improve its pricing to a fixed exchange ratio of 1.450 shares of Fifth Third common stock plus $5.54 in cash for each MB Financial common share, representing an implied value of $55.35 per share based on Fifth Third’s closing price on May 16, 2018 and Fifth Third was willing to add two members of the MB Financial board to its board. Further, representatives of Sandler O’Neill informed the board that Party A had increased its offer to $56.00 per MB Financial common share. The increased offer by Party A represented an implied value of $0.65 per share greater than the implied value per share of the Fifth Third offer at such time. After extensive discussion, the board authorized management and its advisors to proceed with Fifth Third given the higher expected long-term value to MB Financial’s stockholders from the Fifth Third proposal, based on the factors discussed above, when compared to the proposal from Party A. The MB Financial Board of Directors authorized management and its advisors to finalize an acceptable definitive agreement with Fifth Third, subject to MB Financial completing its reverse due diligence on Fifth Third.

On May 18, 2018, through an email to Sandler O’Neill, Party A formally withdrew its interest to acquire MB Financial. Later that day, MB Financial entered into an exclusivity agreement with Fifth Third through May 22, 2018.

Early on May 20, 2018, the MB Financial Board of Directors held a telephonic meeting to consider and vote on the final terms of the proposed transaction with Fifth Third. A representative of Silver Freedman reviewed the execution version of the definitive merger agreement with the board including the minor changes that had been made from the draft previously provided to the directors. Representatives of Sandler O’Neill then orally delivered an opinion to the MB Financial Board of Directors to the effect that as of May 20, 2018, the merger consideration was fair to holders of MB Financial common stock from a financial point of view. The board then unanimously approved the merger agreement, the merger and the other transactions contemplated by the merger agreement, and authorized management to execute and deliver the merger agreement.

Also on May 20, 2018, the Fifth Third board met with management and its advisors to consider and vote on the final terms of the proposed transaction with MB Financial. After discussion, the board voted to approve the merger agreement, the merger and the other transactions contemplated by the merger agreement, and authorized management to execute and deliver the merger agreement. That evening the merger agreement was executed by the parties.

On May 21, 2018, the transaction was announced in a joint press release before the opening of stock markets in New York.

Recommendation of the MB Financial Board of Directors and Reasons for the Merger

In reaching its decision to approve the merger agreement, the merger and the other transactions contemplated by the merger agreement, and to recommend that MB Financial preferred stockholders approve the preferred stockholder merger proposal and that MB Financial common stockholders approve the common stockholder merger proposal and the charter amendment proposal, the MB Financial Board of Directors evaluated the merger agreement, the merger and the other transactions contemplated by the merger agreement in consultation with MB

 

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Financial management, as well as MB Financial’s financial and legal advisors, and considered a number of factors, including the following:

 

   

each of MB Financial’s and Fifth Third’s business, operations, financial condition, asset quality, earnings and prospects;

 

   

the complementary capabilities of the two companies, including MB Financial’s commercial expertise and strong credit culture and Fifth Third’s strengths in large corporate lending, capital markets, wealth management and the payments business;

 

   

the similarities in culture and operating strategies of MB Financial and Fifth Third, including a shared focus on building a low cost and stable funding base, growing fee income and investing in human capital;

 

   

the anticipated economies of scale for the combined company, including investments in technology, higher lending limits and expanded product offerings;

 

   

the anticipated pro forma financial impact of the merger on the combined company, including the expected impact on earnings, return on assets, return on equity, tangible book value dilution (and earn-back period), and regulatory capital levels;

 

   

the current and prospective environment in which MB Financial and Fifth Third operate, including national and local economic conditions, the interest rate environment, the competitive and regulatory environments for financial institutions generally, and the likely effect of these factors on MB Financial both with and without the merger;

 

   

the form of merger consideration, including the cash consideration, which would ensure that a portion of the value of the merger consideration would not be subject to potential downward fluctuations in the price of Fifth Third common stock, and the fact that most of the merger consideration would be in stock and with a fixed exchange ratio, which would allow MB Financial’s common stockholders to participate in the future performance of the combined company;

 

   

the fact that the implied value of the merger consideration as of May 18, 2018 of approximately $54.20 for each share of MB Financial common stock, based on Fifth Third’s closing stock price of $33.56 on that date, represented a 24.2% premium over the closing price of MB Financial’s common stock of $43.65 on May 18, 2018;

 

   

the historical performance of Fifth Third common stock, Fifth Third common stock’s liquidity in terms of average daily trading volume and the level of future cash dividends anticipated to be received by MB Financial’s common and preferred stockholders;

 

   

Fifth Third’s record of performance over a substantial period of time and throughout various economic cycles, including its earnings record;

 

   

the soundness of Fifth Third’s financial condition and asset quality;

 

   

publicly available information regarding Fifth Third’s regulatory status and Fifth Third’s statement that it was unaware of any meaningful obstacle to regulatory approvals on a reasonably timely basis;

 

   

the expected tax treatment of the merger, taken together, as a “reorganization” for United States federal income tax purposes;

 

   

the size of the termination fee in relation to the overall transaction size, and the requirement that MB Financial submit the proposal to approve the merger to its stockholders even if the MB Financial Board of Directors has withdrawn its recommendation in favor of such proposal;

 

   

the opinion of Sandler O’Neill, MB Financial’s financial advisor, dated May 20, 2018, delivered to the MB Financial Board of Directors to the effect that, as of such date, and based upon and subject to the various factors, assumptions and limitations set forth in such opinion, the merger consideration to be

 

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received by the holders of MB Financial common stock in the merger was fair to such holders from a financial point of view, as more fully described below under “Opinion of MB Financial’s Financial Advisor”;

 

   

the fact that Fifth Third already has an established presence in the Chicago area and its plans to increase its commitment to the area as a result of the merger;

 

   

Fifth Third’s record of service to its communities as exemplified by its “Outstanding” rating on its most recent Community Reinvestment Act performance evaluation;

 

   

the review undertaken by the MB Financial Board of Directors and management, with the assistance of financial and legal advisors, with respect to the strategic alternatives available to MB Financial, including:

 

   

the merits of a competing proposal that would have provided per share consideration to the holders of MB Financial common stock with an implied value of $0.65 higher than the implied value of the merger consideration on May 16, 2018, the date on which the MB Financial Board of Directors determined that the merger was the better overall transaction, which competing proposal was withdrawn on May 18, 2018;

 

   

the value of MB Financial as an independent company;

 

   

the capital and earnings available to MB Financial as an independent company, at the time and as expected in the future, to pursue various business and strategic initiatives; and

 

   

the challenges facing MB Financial as an independent institution and the MB Financial Board of Directors’ belief that combining with a larger financial institution would benefit MB Financial’s stockholders, customers and communities;

 

   

the fact that the merger agreement provides that MB Financial may take certain actions in response to an unsolicited bona fide written acquisition proposal under specific circumstances, in the event that the MB Financial Board of Directors makes a good faith determination (in accordance with the merger agreement and after consultation with MB Financial’s outside legal counsel and financial advisor) that the failure to take such actions would more likely than not result in a violation of its fiduciary duties under applicable law;

 

   

the other terms of the merger agreement and their comparability to those in other recent consolidation transactions;

 

   

its review and discussions with MB Financial’s management concerning the due diligence examination of Fifth Third;

 

   

the potential risks associated with successfully integrating MB Financial’s business, operations and workforce with those of Fifth Third, including the costs and risks of successfully integrating the two companies;

 

   

the potential risk of diverting management attention and resources from the operation of MB Financial’s and Fifth Third’s respective businesses and towards the completion of the merger and the integration of the two companies;

 

   

the nature and amount of payments expected to be received by MB Financial’s management in connection with the merger, as described under “The Merger—Interests of MB Financial Directors and Executive Officers in the Merger”;

 

   

the likelihood that Fifth Third will be able to obtain requisite regulatory approvals for the transaction on a timely basis, based on MB Financial management’s discussions with Fifth Third; and

 

   

the anticipated continued participation of certain of MB Financial’s directors, officers and employees in the combined company, including the expectation that Mitchell Feiger, MB Financial’s President

 

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and Chief Executive Officer, will become Chairman and Chief Executive Officer of Fifth Third Chicago Region, that other key members of the MB Financial leadership team will join Fifth Third and that two MB Financial directors will be appointed to the Fifth Third Board of Directors, which enhances the likelihood that the strategic benefits that MB Financial expects to achieve as a result of the merger will be realized and that the benefits and talents that MB Financial brings to the combined company will be appropriately valued and effectively utilized.

The foregoing discussion of the information and factors considered by the MB Financial Board of Directors is not intended to be exhaustive, but includes the material factors considered by the MB Financial Board of Directors. In reaching its decision to approve the merger agreement, the merger and the other transactions contemplated by the merger agreement, the MB Financial Board of Directors did not quantify or assign any relative weights to the factors considered, and individual directors may have given different weights to different factors. The MB Financial Board of Directors considered all these factors as a whole, including discussions with MB Financial’s management and MB Financial’s financial and legal advisors, and overall considered the factors to be favorable to, and to support, its determination.

The foregoing discussion of the information and factors considered by the MB Financial Board of Directors is forward-looking in nature. This information should be read in light of the factors described under the section entitled “Cautionary Statement Regarding Forward-Looking Statements.”

For the reasons set forth above, the MB Financial Board of Directors determined that the merger agreement and the transactions contemplated by the merger agreement are advisable and in the best interests of MB Financial and its stockholders, and approved the merger agreement and the transactions contemplated thereby. The MB Financial Board of Directors recommends that holders of MB Financial common stock vote “FOR” the common stockholder merger proposal, “FOR” the charter amendment proposal, “FOR” the merger-related compensation proposal and “FOR” the common stockholder adjournment proposal (if necessary or appropriate), and recommends that holders of MB Financial preferred stock vote “FOR” the preferred stockholder merger proposal and “FOR” the preferred stockholder adjournment proposal (if necessary or appropriate).

Certain MB Financial Prospective Financial Information

MB Financial has made limited public disclosure of forecasts or projections of its expected financial performance because of, among other things, the inherent difficulty of accurately predicting financial performance for future periods and the inherent uncertainty of the underlying assumptions. However, MB Financial management provided Sandler O’Neill with certain nonpublic unaudited prospective financial information prepared by MB Financial management that was utilized by Sandler O’Neill for purposes of financial analyses performed in connection with its fairness opinion, as described under —Opinion of MB Financials Financial Advisor beginning on page 59. A summary of certain significant elements of this information is set forth below and is included in this proxy statement/prospectus solely because such information was made available to Sandler O’Neill in connection with its fairness opinion. The information included below does not comprise all of the prospective financial information provided by MB Financial to Sandler O’Neill.

The prospective financial information for MB Financial reflects numerous estimates and assumptions with respect to industry performance, general business, economic, regulatory, market and financial conditions and other future events, as well as matters specific to MB Financial’s business, all of which are inherently uncertain and difficult to predict and many of which are beyond MB Financial’s control. The prospective financial information is subjective in many respects and thus is susceptible to multiple interpretations and periodic revisions based on actual experience and business developments. The prospective financial information may also be affected by MB Financial’s ability to achieve strategic goals, objectives and targets over the applicable periods. As such, the prospective financial information constitutes forward-looking information and is subject to risks and uncertainties, including the risks and uncertainties described under Risk Factors, beginning on page 27, Cautionary Statement Regarding Forward-Looking Statements, beginning on page 25, and in MB

 

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Financial’s Annual Report on Form 10-K for the year ended December 31, 2017 and the other reports filed by MB Financial with the SEC that are incorporated by reference into this proxy statement/prospectus, as described under Incorporation of Certain Documents by Reference,” beginning on page 133.

The prospective financial information for MB Financial was generally not prepared with a view toward public disclosure or complying with GAAP, the published guidelines of the SEC regarding forward-looking statements or the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial information. Neither MB Financial’s independent registered public accounting firm, nor any other independent accountants, have compiled, examined or performed any procedures with respect to the prospective financial information included below, nor have they expressed any opinion or any other form of assurance on such information or its achievability, and they assume no responsibility for, and disclaim any association with, the prospective financial information. Furthermore, the prospective financial information does not take into account any circumstances or events occurring after the date it was prepared.

You are strongly cautioned not to place undue reliance on the prospective financial information set forth below. The inclusion of the prospective financial information in this proxy statement/prospectus should not be regarded as an indication that any of MB Financial, Fifth Third or their respective affiliates, advisors or representatives considered or consider the prospective financial information to be necessarily predictive of actual future events, and the prospective financial information should not be relied upon as such. None of MB Financial, Fifth Third or their respective affiliates, advisors or representatives can give any assurance that actual results will not differ from the prospective financial information, and none of them undertakes any obligation to update or otherwise revise or reconcile the prospective financial information to reflect circumstances existing after the date such information was prepared or to reflect the occurrence of future events even in the event that any or all of the assumptions underlying the prospective financial information are shown to be in error or to reflect changes in general economic or industry conditions. None of MB Financial, Fifth Third or their respective affiliates, advisors or representatives makes any representation to any stockholder regarding the projections.

In light of the foregoing, and considering that the special meeting will be held several months after the prospective financial information was prepared, as well as the uncertainties inherent in any forecasted information, MB Financial’s stockholders are cautioned not to place unwarranted reliance on such information, and Fifth Third and MB Financial urge all stockholders to review MB Financial’s most recent SEC filings for a description of MB Financial’s reported financial results. See “Where You Can Find More Information” in the forepart of this proxy statement/prospectus and “Incorporation of Certain Documents by Reference,” beginning on page 133.

The prospective financial information summarized in this section is not being included in this proxy statement/prospectus in order to induce any MB Financial stockholder to vote in favor of any of the proposals to be voted on at the special meeting.

The following table presents summary selected unaudited prospective financial information of MB Financial prepared by MB Financial’s management. This information excludes the results of MB Financial’s national residential mortgage origination business, which MB Financial is in the process of exiting, along with the related exit costs.

 

     At or For the Years Ending
December 31,
 
     2018     2019  

Total Assets (in thousands)

   $ 21,125,140     $ 22,599,483  

Net Income (in thousands)

   $ 259,524     $ 315,235  

Return on Average Assets

     1.33 %     1.49

Return on Average Tangible Common Equity

     14.79 %     16.11

Earnings Per Common Share—Diluted

   $ 3.06     $ 3.71  

 

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Opinion of MB Financial’s Financial Advisor

MB Financial retained Sandler O’Neill to act as financial advisor to MB Financial’s Board of Directors in connection with MB Financial’s consideration of a possible business combination. MB Financial selected Sandler O’Neill as its financial advisor because Sandler O’Neill is a nationally recognized investment banking firm whose principal business specialty is financial institutions. In the ordinary course of its investment banking business, Sandler O’Neill is regularly engaged in the valuation of financial institutions and their securities in connection with mergers and acquisitions and other corporate transactions.

Sandler O’Neill acted as financial advisor to MB Financial in connection with the proposed merger and participated in certain of the negotiations leading to the execution of the merger agreement. At the May 20, 2018 meeting at which MB Financial’s Board of Directors considered the merger agreement, Sandler O’Neill delivered to the board its oral opinion, which was subsequently confirmed in writing on May 20, 2018, to the effect that, as of such date, the merger consideration was fair to the holders of MB Financial common stock from a financial point of view. The full text of Sandler O’Neill’s opinion is attached as Appendix B to this proxy statement/prospectus. The opinion outlines the procedures followed, assumptions made, matters considered and qualifications and limitations on the review undertaken by Sandler O’Neill in rendering its opinion. The description of the opinion set forth below is qualified in its entirety by reference to the full text of the opinion. Holders of MB Financial common stock are urged to read the entire opinion carefully in connection with their consideration of the proposed merger.

Sandler O’Neill’s opinion speaks only as of the date of the opinion. The opinion was directed to MB Financial’s Board of Directors in connection with its consideration of the merger agreement and the merger and does not constitute a recommendation to any stockholder of MB Financial as to how such stockholder should vote at any meeting of stockholders called to consider and vote upon the approval of the merger. Sandler O’Neill’s opinion was directed only to the fairness, from a financial point of view, of the merger consideration to the holders of MB Financial common stock and did not address the underlying business decision of MB Financial to engage in the merger, the form or structure of the merger or the other transactions contemplated in the merger agreement, the relative merits of the merger as compared to any other alternative transactions or business strategies that might exist for MB Financial or the effect of any other transaction in which MB Financial might engage. Sandler O’Neill also did not express any opinion as to the amount of compensation to be received in the merger by any MB Financial or Fifth Third officer, director, or employee, or class of such persons, if any, relative to the amount of compensation to be received by any other stockholder. Sandler O’Neill’s opinion was approved by Sandler O’Neill’s fairness opinion committee.

In connection with its opinion, Sandler O’Neill reviewed and considered, among other things:

 

   

A draft of the merger agreement, dated as of May 20, 2018;

 

   

Certain publicly available financial statements and other historical financial information of MB Financial that Sandler O’Neill deemed relevant;

 

   

Certain publicly available financial statements and other historical financial information of Fifth Third that Sandler O’Neill deemed relevant;

 

   

Internal financial projections for MB Financial for the years ending December 31, 2018 through December 31, 2022, as provided by the senior management of MB Financial;

 

   

Publicly available median analyst earnings per share estimates for Fifth Third for the years ending December 31, 2018 through December 31, 2020 and an estimated long-term annual earnings growth rate for the years thereafter, as provided by the senior management of MB Financial, as well as an estimated dividend payout ratio and estimated share buyback ratios as provided by the senior management of Fifth Third;

 

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The pro forma financial impact of the merger on Fifth Third based on certain assumptions relating to transaction expenses, purchase accounting adjustments and cost savings, as provided by the senior management of Fifth Third, as well as publicly available median consensus analyst earnings per share estimates for MB Financial for the years ending December 31, 2018 and December 31, 2019 and a long-term annual earnings growth rate for the years thereafter, as provided by the senior management of MB Financial;

 

   

The publicly reported historical price and trading activity for MB Financial common stock and Fifth Third common stock, including a comparison of certain stock market information for MB Financial common stock and Fifth Third common stock and certain stock indices as well as publicly available information for certain other similar companies, the securities of which were publicly traded;

 

   

A comparison of certain financial information for MB Financial and Fifth Third with similar institutions for which information was publicly available;

 

   

The financial terms of certain recent business combinations in the banking industry (on a nationwide basis), to the extent publicly available;

 

   

The current market environment generally and the banking environment in particular; and

 

   

Such other information, financial studies, analyses and investigations and financial, economic and market criteria as Sandler O’Neill considered relevant.

Sandler O’Neill also discussed with certain members of senior management of MB Financial the business, financial condition, results of operations and prospects of MB Financial and held similar discussions with certain members of senior management of Fifth Third and its representatives regarding the business, financial condition, results of operations and prospects of Fifth Third.

In performing its review, Sandler O’Neill relied upon the accuracy and completeness of all of the financial and other information that was available to and reviewed by Sandler O’Neill from public sources, that was provided to Sandler O’Neill by MB Financial or Fifth Third, or their respective representatives, or that was otherwise reviewed by Sandler O’Neill and Sandler O’Neill assumed such accuracy and completeness for purposes of rendering its opinion without any independent verification or investigation. Sandler O’Neill further relied on the assurances of the respective senior managements of MB Financial and Fifth Third that they were not aware of any facts or circumstances that would make any of such information inaccurate or misleading. Sandler O’Neill was not asked to undertake, and did not undertake, an independent verification of any of such information and Sandler O’Neill did not assume any responsibility or liability for the accuracy or completeness thereof. Sandler O’Neill did not make an independent evaluation or perform an appraisal of the specific assets, the collateral securing assets or the liabilities (contingent or otherwise) of MB Financial or Fifth Third, or any of their respective subsidiaries, and Sandler O’Neill was not furnished with any evaluations or appraisals prepared by others. Sandler O’Neill rendered no opinion or evaluation on the collectability of any assets or the future performance of any loans of MB Financial or Fifth Third or any of their respective subsidiaries. Sandler O’Neill did not make an independent evaluation of the adequacy of the allowance for loan losses of MB Financial or Fifth Third, or the combined entity after the merger, and did not review any individual credit files relating to MB Financial or Fifth Third or any of their respective subsidiaries. Sandler O’Neill assumed, with MB Financial’s consent, that the respective allowances for loan losses for both MB Financial and Fifth Third were adequate to cover such losses and would be adequate on a pro forma basis for the combined entity.

In preparing its analyses, Sandler O’Neill used internal financial projections for MB Financial for the years ending December 31, 2018 through December 31, 2022, as provided by the senior management of MB Financial. In addition, in preparing its analyses Sandler O’Neill used publicly available median analyst earnings per share estimates for Fifth Third for the years ending December 31, 2018 through December 31, 2020 and an estimated long-term annual earnings growth rate for the years thereafter, as provided by the senior management of MB Financial, as well as an estimated dividend payout ratio and estimated share buyback ratios as provided by the

 

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senior management of Fifth Third. Sandler O’Neill also received and used in its pro forma analyses certain assumptions relating to transaction expenses, purchase accounting adjustments and cost savings, as provided by the senior management of Fifth Third, as well as publicly available median consensus analyst earnings per share estimates for MB Financial for the years ending December 31, 2018 and December 31, 2019 and a long-term annual earnings growth rate for the years thereafter, as provided by the senior management of MB Financial. With respect to the foregoing information, the respective senior managements of MB Financial and Fifth Third confirmed to us that such information reflected (or, in the case of the publicly available median analyst estimates referred to above, were consistent with) the best currently available projections, estimates and judgment of those respective senior managements as to the future financial performance of MB Financial and Fifth Third, respectively, and the other matters covered thereby, and Sandler O’Neill assumed that the future financial performance reflected in such information would be achieved. Sandler O’Neill expressed no opinion as to such projections, estimates or judgments, or the assumptions on which they were based. Sandler O’Neill also assumed that there was no material change in MB Financial’s or Fifth Third’s assets, financial condition, results of operations, business or prospects since the date of the most recent financial statements made available to Sandler O’Neill. Sandler O’Neill assumed in all respects material to its analysis that MB Financial and Fifth Third would remain as going concerns for all periods relevant to its analyses.

Sandler O’Neill also assumed, with MB Financial’s consent, that (i) each of the parties to the merger agreement would comply in all material respects with all material terms and conditions of the merger agreement and all related agreements, that all of the representations and warranties contained in such agreements were true and correct in all material respects, that the parties to such agreements would perform in all material respects all of the covenants and other obligations required to be performed by such party under such agreements and that the conditions precedent in such agreements were and would not be waived, (ii) in the course of obtaining the necessary regulatory or third party approvals, consents and releases with respect to the merger, no delay, limitation, restriction or condition would be imposed that would have an adverse effect on MB Financial, Fifth Third or the benefits contemplated by the merger or any related transactions, and (iii) the merger and any related transactions would be consummated in accordance with the terms of the merger agreement without any waiver, modification or amendment of any material term, condition or agreement thereof and in compliance with all applicable laws and other requirements. With MB Financial’s consent, Sandler O’Neill relied upon the advice that MB Financial received from its legal, accounting and tax advisors as to all legal, accounting and tax matters relating to the merger and the other transactions contemplated by the merger agreement. Sandler O’Neill expressed no opinion as to any such matters.

Sandler O’Neill’s analyses and opinion were necessarily based on financial, economic, market and other conditions as in effect on, and the information made available to Sandler O’Neill as of, the date of its opinion. Events occurring after the date of the opinion could materially affect Sandler O’Neill’s opinion. Sandler O’Neill has not undertaken to update, revise, reaffirm or withdraw its opinion or otherwise comment upon events occurring after the date thereof. Sandler O’Neill expressed no opinion as to the trading values of MB Financial common stock or Fifth Third common stock at any time or what the value of Fifth Third common stock would be once it is actually received by the holders of MB Financial common stock.

In rendering its opinion, Sandler O’Neill performed a variety of financial analyses. The summary below is not a complete description of all the analyses underlying Sandler O’Neill’s opinion or the presentation made by Sandler O’Neill to MB Financial’s Board of Directors, but is a summary of the material analyses performed and presented by Sandler O’Neill. The summary includes information presented in tabular format. In order to fully understand the financial analyses, these tables must be read together with the accompanying text. The tables alone do not constitute a complete description of the financial analyses. The preparation of a fairness opinion is a complex process involving subjective judgments as to the most appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances. The process, therefore, is not necessarily susceptible to a partial analysis or summary description. Sandler O’Neill believes that its analyses must be considered as a whole and that selecting portions of the factors and analyses to be considered without considering all factors and analyses, or attempting to ascribe relative weights to some or all such factors and

 

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analyses, could create an incomplete view of the evaluation process underlying its opinion. Also, no company included in Sandler O’Neill’s comparative analyses described below is identical to MB Financial or Fifth Third and no transaction is identical to the merger. Accordingly, an analysis of comparable companies or transactions involves complex considerations and judgments concerning differences in financial and operating characteristics of the companies and other factors that could affect the public trading values or merger transaction values, as the case may be, of MB Financial and Fifth Third and the companies to which they were compared. In arriving at its opinion, Sandler O’Neill did not attribute any particular weight to any analysis or factor that it considered. Rather, Sandler O’Neill made qualitative judgments as to the significance and relevance of each analysis and factor. Sandler O’Neill did not form an opinion as to whether any individual analysis or factor (positive or negative) considered in isolation supported or failed to support its opinion, rather, Sandler O’Neill made its determination as to the fairness of the merger consideration to the holders of MB Financial common stock on the basis of its experience and professional judgment after considering the results of all its analyses taken as a whole.

In performing its analyses, Sandler O’Neill also made numerous assumptions with respect to industry performance, business and economic conditions and various other matters, many of which cannot be predicted and are beyond the control of MB Financial, Fifth Third, and Sandler O’Neill. The analyses performed by Sandler O’Neill are not necessarily indicative of actual values or future results, both of which may be significantly more or less favorable than suggested by such analyses. Sandler O’Neill prepared its analyses solely for purposes of rendering its opinion and provided such analyses to MB Financial’s Board of Directors at its May 20, 2018 meeting. Estimates on the values of companies do not purport to be appraisals or necessarily reflect the prices at which companies or their securities may actually be sold. Such estimates are inherently subject to uncertainty and actual values may be materially different. Accordingly, Sandler O’Neill’s analyses do not necessarily reflect the value of MB Financial common stock or Fifth Third common stock or the prices at which MB Financial or Fifth Third common stock may be sold at any time. The analyses of Sandler O’Neill and its opinion were among a number of factors taken into consideration by MB Financial’s Board of Directors in making its determination to approve the merger agreement and the analyses described below should not be viewed as determinative of the decision of MB Financial’s Board of Directors with respect to the fairness of the merger.

Summary of Proposed Merger Consideration and Implied Transaction Metrics. Sandler O’Neill reviewed the financial terms of the proposed transaction. Sandler O’Neill calculated an implied purchase price per share of $54.20, or an aggregate implied transaction value of approximately $4.653 billion, consisting of the sum of (i) the implied value of 1.45 shares of Fifth Third common stock based on the closing price of Fifth Third common stock on May 18, 2018 plus (ii) $5.54. Based upon financial information for MB Financial as of or for the most recent available completed quarter (“MRQ”) ended March 31, 2018, the publicly available median consensus analyst 2018 earnings per share estimate for MB Financial, 2018 internal financial projections for MB Financial as provided by the senior management of MB Financial and the closing price of MB Financial common stock on May 18, 2018, Sandler O’Neill calculated the following implied transaction metrics:

 

Implied Purchase Price Per Share / MRQ Core EPS Annualized¹

     21.2

Implied Purchase Price Per Share / Median Consensus Analyst 2018E Earnings Per Share

     19.2

Implied Purchase Price Per Share / Management Forecast 2018E Earnings Per Share

     17.7

Implied Purchase Price Per Share / March 31, 2018 Book Value Per Share

     166

Implied Purchase Price Per Share / March 31, 2018 Tangible Book Value Per Share

     271

Tangible Book Premium / Core Deposits² (“Core Deposit Premium”)

     22.4

Market Premium as of May 18, 2018

     24.2

 

1 

MRQ Core EPS Annualized reflected diluted operating earnings per common share for the first quarter of 2018, as reported by MB Financial, annualized.

2 

Core Deposits defined as deposits less time deposits with a balance of at least $100,000 and brokered deposits.

 

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Stock Trading History. Sandler O’Neill reviewed the historical publicly reported trading prices of MB Financial common stock and Fifth Third common stock for the three-year periods ended May 18, 2018. Sandler O’Neill then compared the relationship between the movements in the price of MB Financial common stock and Fifth Third common stock, respectively, to movements in their respective peer groups (as described below) as well as certain stock indices.

MB Financial’s Three-Year Stock Performance

 

     Beginning Value
May 18, 2015
    Ending Value
May 18, 2018
 

MB Financial

     100     137.6

NASDAQ Bank Index

     100     155.4

MB Financial Peers

     100     140.4

Fifth Third’s Three-Year Stock Performance

 

     Beginning Value
May 18, 2015
    Ending Value
May 18, 2018
 

Fifth Third

     100     163.5

NASDAQ Bank Index

     100     155.4

Fifth Third Peers

     100     141.7

Comparable Company Analyses. Sandler O’Neill used publicly available information to compare selected financial information for MB Financial with a group of financial institutions selected by Sandler O’Neill. The MB Financial peer group included 17 United States banks headquartered in the continental 48 states with securities publicly traded on major United States exchanges and assets between $15.0 billion and $25.0 billion, but excluded targets of announced merger transactions. The MB Financial peer group consisted of the following companies:

 

BancorpSouth Bank    Prosperity Bancshares, Inc.
Bank of the Ozarks    Simmons First National Corporation
Cathay General Bancorp    TCF Financial Corporation
Chemical Financial Corporation    Texas Capital Bancshares, Inc.
Commerce Bancshares, Inc.    UMB Financial Corporation
Fulton Financial Corporation    United Bankshares, Inc.
Old National Bancorp    Washington Federal, Inc.
PacWest Bancorp    Western Alliance Bancorporation
Pinnacle Financial Partners, Inc.   

The analysis compared publicly available financial information for MB Financial with corresponding data for the MB Financial peer group as of or for the twelve months ended March 31, 2018 (unless otherwise indicated), with pricing data as of May 18, 2018. The table below sets forth the data for MB Financial and the high, low, mean, and median data for the MB Financial peer group. Certain financial data prepared by Sandler O’Neill, as referenced in the table presented below, may not correspond to the data presented in MB Financial’s historical financial statements, as a result of the different periods, assumptions and methods used by Sander O’Neill to compute the financial data presented.

 

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MB Financial Comparable Company Analysis

 

    MB
Financial¹
    Peer
Group
High
    Peer
Group
Low
    Peer
Group
Mean
    Peer
Group
Median
 

Total Assets ($ millions)

  $ 20,168     $ 24,611     $ 15,597     $ 20,348     $ 20,761  

Loans / Deposits

    93.1     108.9     57.6     91.1     94.3

Non-Performing Assets² / Total Assets

    0.36     0.84     0.05     0.45     0.41

Tangible Common Equity / Tangible Assets³

    8.9     13.2     7.8     9.5     9.4

CET 1 Ratio

    9.5     15.7     8.8     11.6     11.2

Total Risk Based Capital Ratio

    13.6     17.0     11.2     13.6     13.3

LTM Return on Average Assets (“ROAA”)

    1.54     2.20     0.67     1.24     1.24

LTM Return on Average Tangible Common Equity4 (“ROATCE”)

    20.5     19.1     9.3     13.4     13.8

LTM Net Interest Margin

    3.69     5.09     3.15     3.79     3.59

LTM Efficiency Ratio

    64.1     68.3     34.6     52.9     51.0

Stock Price / Tangible Book Value

    216     326     163     237     234

Stock Price / MRQ Annualized Earnings Per Share

    16.8     18.0     13.5     15.5     15.4

Stock Price / Mean Analyst 2018E Earnings Per Share

    15.5     17.9     12.9     14.7     14.3

Stock Price / Mean Analyst 2019E Earnings Per Share

    13.2     17.2     11.3     13.5     13.4

Current Dividend Yield

    2.2     4.5     0.0     2.0     1.9

Market Capitalization ($ millions)

  $ 3,669     $ 6,885     $ 2,716     $ 4,461     $ 3,993  

 

1 

Per MB Financial’s public filings, as applicable; normalized for the one-time impact of tax reform, MB Financial’s LTM ROAA and LTM ROATCE were approximately 1.00% and 13.5%, respectively. MRQ Annualized Earnings Per Share for MB Financial were based on diluted operating earnings per common share for the first quarter of 2018, as reported by MB Financial, annualized.

2

Excluded restructured loans.

3

Tangible Common Equity / Tangible Assets ratio was based on prior quarter data in the case of Cathay General Bancorp.

4

LTM ROATCE was sourced from regulatory filings in the case of TCF Financial Corporation and Simmons First National Corporation and was based on prior quarter data in the case of Cathay General Bancorp.

Sandler O’Neill used publicly available information to perform a similar analysis for Fifth Third by comparing selected financial information for Fifth Third with a group of financial institutions selected by Sandler O’Neill. The Fifth Third peer group included 10 United States banks with securities publicly traded on major United States exchanges and assets between $75.0 billion and $500.0 billion, but excluded Northern Trust Corp., State Street Corp., Bank of New York Mellon Corp. and Capital One Financial. The Fifth Third peer group consisted of the following companies:

 

BB&T Corporation    M&T Bank Corporation
Citizens Financial Group, Inc.    PNC Financial Services Group, Inc.
First Republic Bank    Regions Financial Corporation
Huntington Bancshares Inc.    SunTrust Banks, Inc.
KeyCorp    U.S. Bancorp

The analysis compared publicly available financial information for Fifth Third with corresponding data for the Fifth Third peer group as of or for the twelve months ended March 31, 2018 (unless otherwise indicated), with pricing data as of May 18, 2018. The table below sets forth the data for Fifth Third and the high, low, mean, and median data for the Fifth Third peer group. Certain financial data prepared by Sandler O’Neill, as referenced in the table presented below, may not correspond to the data presented in Fifth Third’s historical financial statements, as a result of the different periods, assumptions and methods used by Sander O’Neill to compute the financial data presented.

 

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Fifth Third Comparable Company Analysis

 

    Fifth
Third¹
    Peer Group
High
    Peer
Group
Low
    Peer Group
Mean
    Peer Group
Median
 

Total Assets ($ millions)

  $ 141,500     $ 460,119     $ 90,224     $ 199,140     $ 145,251  

Loans / Deposits

    87.2     96.3     80.5     88.2     88.7

Non-Performing Assets² / Total Assets

    0.37     0.81     0.05     0.42     0.40

Tangible Common Equity / Tangible Assets

    8.9     9.0     7.5     8.1     8.1

CET 1 Ratio

    10.8     11.2     9.0     10.3     10.4

Total Risk Based Capital Ratio

    15.3     14.4     12.5     13.5     13.7

LTM Return on Average Assets

    1.84     1.48     0.94     1.21     1.19

LTM Return on Average Tangible Common Equity³

    20.0     18.7     11.7     14.6     13.9

LTM Net Interest Margin

    3.07     3.56     2.90     3.22     3.18

LTM Efficiency Ratio

    55.4     62.4     55.1     59.0     59.0

Stock Price / Tangible Book Value

    186     271     153     220     213

Stock Price / MRQ Annualized Earnings Per Share

    14.7     21.7     13.2     15.2     13.6

Stock Price / Mean Analyst 2018E Earnings Per Share

    13.6     20.3     11.9     13.8     13.3

Stock Price / Mean Analyst 2019E Earnings Per Share

    12.4     17.8     10.8     12.6     12.4

Current Dividend Yield

    1.9     2.9     0.7     2.1     2.2

Market Capitalization ($ millions)

  $ 23,005     $ 83,026     $ 15,879     $ 34,954     $ 23,953  

 

1

Per Fifth Third’s public filings, core LTM ROAA, core LTM ROATCE and core LTM efficiency ratio were 1.11%, 11.7% and 63.7%, respectively. MRQ Annualized Earnings Per Share for Fifth Third were based on core diluted earnings per share for the first quarter of 2018, as reported by Fifth Third, annualized.

2

Excluded restructured loans.

3

LTM ROATCE was sourced from regulatory filings in the case of PNC Financial Services Group, Inc., Citizens Financial Group, Inc., KeyCorp and Regions Financial Corporation.

Analysis of Precedent Transactions. Sandler O’Neill reviewed a group of selected merger and acquisition transactions (the “Precedent Transactions”). The Precedent Transactions included 10 United States bank transactions announced between January 1, 2012 and May 18, 2018 with target company assets between $8.0 billion and $40.0 billion, but excluded the Toronto-Dominion Bank / Scottrade Bank transaction, TIAA Board of Overseers / EverBank Financial Corp transaction and CIT Group Inc. / IMB HoldCo LLC transaction.

The Precedent Transactions were composed of the following transactions:

 

Acquiror

  

Target

First Horizon National Corp.    Capital Bank Financial Corp
Sterling Bancorp    Astoria Financial Corp.
Canadian Imperial Bank of Commerce    PrivateBancorp Inc.
Huntington Bancshares Inc.    FirstMerit Corp.
KeyCorp    First Niagara Financial Group
BB&T Corp.    National Penn Bancshares Inc.
Royal Bank of Canada    City National Corp.
BB&T Corp.    Susquehanna Bancshares Inc.
First Citizens BancShares Inc.    First Citizens Bancorp.
Umpqua Holdings Corp.    Sterling Financial Corp.
PacWest Bancorp    CapitalSource Inc.
FirstMerit Corp.    Citizens Republic Bancorp Inc.

Using the latest publicly available information prior to the announcement of the relevant transaction, Sandler O’Neill reviewed the following transaction metrics: transaction price to last-twelve-months earnings per share,

 

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transaction price to estimated one-year forward earnings per share (to the extent publicly available), transaction price to tangible book value per share, core deposit premium (to the extent publicly available), and 1-day market premium. Sandler O’Neill compared the indicated transaction metrics for the merger to the high, low, mean and median metrics of the Precedent Transactions.

 

     Fifth Third
/ MB
Financial1
    Precedent
Transactions
High
    Precedent
Transactions
Low
    Precedent
Transactions
Mean
    Precedent
Transactions
Median
 

Transaction price/LTM earnings per share2

     21.2     35.4     14.2     21.0     19.2

Transaction price/Estimated one-year forward EPS

     19.2     21.3     14.0     18.6     19.1

Transaction price/Tangible book value per share

     271     265     118     181     169

Core deposit premium³

     22.4     35.4     1.5     12.6     9.9

1-Day market premium4

     24.2     40.4     (2.9 %)      21.0     18.6

 

1

Indicated transaction metrics for the merger were based on the implied purchase price per share of $54.20, diluted operating earnings per common share for the first quarter of 2018, as reported by MB Financial, annualized for 2018, the publicly available median consensus analyst 2018 earnings per share estimate for MB Financial, financial information for MB Financial as of or for the quarter ended March 31, 2018 and the closing price of MB Financial common stock on May 18, 2018.

²

Excluded the multiples of the PacWest Bancorp/CapitalSource Inc. and FirstMerit Corp./Citizens Republic Bancorp Inc. transactions as not meaningful.

3 

Excluded the multiples of the Sterling Bancorp/Astoria Financial Corp. and FirstMerit Corp./Citizens Republic Bancorp Inc. transactions as not meaningful.

4 

Excluded the premium of the Canadian Imperial Bank of Commerce/PrivateBancorp Inc. transaction as not meaningful.

Net Present Value Analyses. Sandler O’Neill performed an analysis that estimated the net present value per share of MB Financial common stock, assuming MB Financial performed in accordance with internal financial projections for MB Financial for the years ending December 31, 2018 through December 31, 2022, as provided by the senior management of MB Financial. To approximate the terminal value of MB Financial common stock at December 31, 2022, Sandler O’Neill applied price to 2022 earnings multiples ranging from 14.0x to 18.0x and multiples of December 31, 2022 tangible book value ranging from 200% to 275%. The terminal values were then discounted to present values using different discount rates ranging from 8.5% to 11.5%, which were chosen to reflect different assumptions regarding required rates of return of holders or prospective buyers of MB Financial common stock. As illustrated in the following tables, the analysis indicated an imputed range of values per share of MB Financial common stock of $46.87 to $66.95 when applying multiples of earnings and $45.26 to $68.73 when applying multiples of tangible book value.

Imputed Present Values per Share Based on Earnings Multiples:

 

Discount Rate

   14.0x    15.0x    16.0x    17.0x    18.0x

  8.5%

   $53.11    $56.57    $60.03    $63.49    $66.95

  9.0%

     52.00      55.39      58.77      62.16      65.55

  9.5%

     50.92      54.23      57.55      60.86      64.17

10.0%

     49.87      53.11      56.35      59.60      62.84

10.5%

     48.84      52.01      55.19      58.36      61.54

11.0%

     47.84      50.95      54.05      57.16      60.27

11.5%

     46.87      49.91      52.95      55.99      59.03

 

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Imputed Present Values per Share Based on Tangible Book Multiples

 

Discount Rate

   200%    215%    230%    245%    260%    275%

  8.5%

   $51.27    $54.76    $58.25    $61.74    $65.23    $68.73

  9.0%

     50.20      53.62      57.03      60.45      63.86      67.28

  9.5%

     49.16      52.50      55.84      59.19      62.53      65.87

10.0%

     48.15      51.42      54.69      57.96      61.23      64.50

10.5%

     47.16      50.36      53.56      56.76      59.96      63.16

11.0%

     46.19      49.33      52.46      55.59      58.73      61.86

11.5%

     45.26      48.32      51.39      54.46      57.52      60.59

Sandler O’Neill also considered and discussed with the MB Financial Board of Directors how this analysis would be affected by changes in the underlying assumptions, including variations with respect to earnings. To illustrate this impact, Sandler O’Neill performed a similar analysis, assuming MB Financial’s earnings varied from 15% above estimates to 15% below estimates. This analysis resulted in the following range of per share values for MB Financial common stock, applying the price to 2022 earnings multiples range of 14.0x to 18.0x referred to above and a discount rate of 10.00%.

Imputed Present Values per Share Based on Earnings Multiples

 

Annual Estimate

Variance

 

14.0x

 

15.0x

 

16.0x

 

17.0x

 

18.0x

(15.0%)

  $43.06   $45.81   $48.57   $51.33   $54.08

(10.0%)

    45.33     48.24     51.16     54.08     57.00

  (5.0%)

    47.60     50.68     53.76     56.84     59.92

  0.0%

    49.87     53.11     56.35     59.60     62.84

  5.0%

    52.14     55.54     58.95     62.35     65.76

10.0%

    54.41     57.97     61.54     65.11     68.68

15.0%

    56.68     60.41     64.14     67.86     71.59

Sandler O’Neill also performed an analysis that estimated the net present value per share of Fifth Third common stock, assuming that Fifth Third performed in accordance with publicly available median analyst earnings per share estimates for Fifth Third for the years ending December 31, 2018 through December 31, 2020 and an estimated annual earnings growth rate for Fifth Third for the years ending December 31, 2021 and December 31, 2022, as provided by MB Financial senior management, and also assuming an estimated dividend payout ratio and estimated share buyback ratios as provided by Fifth Third senior management. To approximate the terminal value of Fifth Third common stock at December 31, 2022, Sandler O’Neill applied price to 2022 earnings multiples ranging from 13.0x to 16.0x and multiples of December 31, 2022 tangible book value ranging from 175% to 275%. The terminal values were then discounted to present values using different discount rates ranging from 8.0% to 11.0%, which were chosen to reflect different assumptions regarding required rates of return of holders or prospective buyers of Fifth Third common stock. As illustrated in the following tables, the analysis indicated an imputed range of values per share of Fifth Third common stock of $30.44 to $41.57 when applying multiples of earnings and $29.25 to $49.87 when applying multiples of tangible book value.

 

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Imputed Present Values per Share Based on Earnings Multiples:

 

Discount Rate

 

13.00x

 

13.75x

 

14.50x

 

15.25x

 

16.00x

  8.0%

  $34.46   $36.24   $38.02   $39.79   $41.57

  8.5%

    33.75     35.48     37.22     38.96     40.70

  9.0%

    33.05     34.75     36.45     38.15     39.85

  9.5%

    32.37     34.03     35.70     37.36     39.03

10.0%

    31.71     33.34     34.97     36.59     38.22

10.5%

    31.06     32.66     34.25     35.85     37.44

11.0%

    30.44     32.00     33.56     35.12     36.68

Imputed Present Values per Share Based on Tangible Book Multiples

 

Discount Rate

 

175%

 

200%

 

225%

 

250%

 

275%

  8.0%

  $33.10   $37.30   $41.49   $45.68   $49.87

  8.5%

    32.42     36.52     40.62     44.72     48.82

  9.0%

    31.75     35.76     39.77     43.79     47.80

  9.5%

    31.10     35.03     38.95     42.88     46.80

10.0%

    30.47     34.31     38.15     41.99     45.83

10.5%

    29.85     33.61     37.37     41.13     44.89

11.0%

    29.25     32.93     36.61     40.29     43.97

Sandler O’Neill also considered and discussed with the MB Financial Board of Directors how this analysis would be affected by changes in the underlying assumptions, including variations with respect to earnings. To illustrate this impact, Sandler O’Neill performed a similar analysis assuming Fifth Third’s earnings varied from 15% above estimates to 15% below estimates. This analysis resulted in the following range of per share values for Fifth Third common stock, applying the price to 2022 earnings multiples range of 13.00x to 16.00x referred to above and a discount rate of 9.5%.

Imputed Present Values per Share Based on Earnings Multiples:

 

Annual Estimate
Variance

 

13.00x

 

13.75x

 

14.50x

 

15.25x

 

16.00x

(15.0%)

  $28.04   $29.46   $30.87   $32.29   $33.70

(10.0%)

    29.48     30.98     32.48     33.98     35.48

  (5.0%)

    30.93     32.51     34.09     35.67     37.25

  0.0%

    32.37     34.03     35.70     37.36     39.03

  5.0%

    33.81     35.56     37.31     39.06     40.80

10.0%

    35.26     37.09     38.92     40.75     42.58

15.0%

    36.70     38.61     40.53     42.44     44.35

Sandler O’Neill noted that the net present value analysis is a widely used valuation methodology, but the results of such methodology are highly dependent upon the numerous assumptions that must be made, and the results thereof are not necessarily indicative of actual values or future results.

Pro Forma Merger Analysis. Sandler O’Neill analyzed certain potential pro forma effects of the merger, assuming the merger closes at the end of the fourth calendar quarter of 2018. Sandler O’Neill utilized the following information and assumptions: (a) publicly available median analyst earnings per share estimates for Fifth Third for the years ending December 31, 2018 through December 31, 2020, and an estimated long-term annual earnings growth rate for Fifth Third for the years thereafter as provided by the senior management of MB Financial, and an estimated dividend payout ratio and estimated share buyback ratios as provided by Fifth Third senior management; (b) publicly available median consensus analyst earnings per share estimates for MB

 

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Financial for the years ending December 31, 2018 and December 31, 2019 and an estimated long-term annual earnings growth rate for MB Financial for the years thereafter as provided by MB Financial senior management; and (c) certain assumptions relating to transaction expenses, purchase accounting adjustments and cost savings, as provided by Fifth Third senior management. The analysis indicated that the merger could be accretive to Fifth Third’s estimated earnings per share (excluding one-time transaction costs and expenses) in the years ending December 31, 2019 through December 31, 2023 and dilutive to Fifth Third’s estimated tangible book value per share at close and at December 31, 2019, December 31, 2020, December 31, 2021, December 31, 2022 and December 31, 2023.

In connection with this analysis, Sandler O’Neill considered and discussed with the MB Financial Board of Directors how the analysis would be affected by changes in the underlying assumptions, including the impact of final purchase accounting adjustments determined at the closing of the merger, and noted that the actual results achieved by the combined company may vary from projected results and the variations may be material.

Sandler O’Neill’s Relationship. Sandler O’Neill is acting as MB Financial’s financial advisor in connection with the merger and will receive a fee for such services, which fee is contingent upon the closing of the merger, in an amount currently estimated to be approximately $25.0 million. Sandler O’Neill also received a $3 million fee from MB Financial for rendering its opinion, which opinion fee will be credited in full towards the transaction fee becoming payable to Sandler O’Neill upon closing of the merger. MB Financial has also agreed to indemnify Sandler O’Neill against certain claims and liabilities arising out of Sandler O’Neill’s engagement and to reimburse Sandler O’Neill for certain of its out-of-pocket expenses incurred in connection with Sandler O’Neill’s engagement.

In the two years preceding the date of Sandler O’Neill’s opinion, Sandler O’Neill provided certain other investment banking services to MB Financial. Most recently, Sandler O’Neill acted as (i) financial advisor to MB Financial in connection with MB Financial’s acquisition of American Chartered Bancorp, Inc., which transaction closed in August 2016, (ii) book manager in connection with MB Financial’s offer and sale of preferred stock, which transaction closed in November 2017, and (iii) book manager in connection with MB Financial’s banking subsidiary’s offer and sale of subordinated debt, which transaction closed in November 2017. Sandler O’Neill did not provide any investment banking services to Fifth Third in the two years preceding the date of Sandler O’Neill’s opinion. In the ordinary course of Sandler O’Neill’s business as a broker-dealer, Sandler O’Neill may purchase securities from and sell securities to MB Financial, Fifth Third and their respective affiliates. Sandler O’Neill may also actively trade the equity and debt securities of MB Financial and Fifth Third or their respective affiliates for Sandler O’Neill’s own account and for the accounts of its customers.

Fifth Third’s Board of Directors’ Reasons for the Merger

Fifth Third’s reasons for entering into the merger agreement include:

 

   

the opportunity to bolster Fifth Third’s Chicago presence in a well-known, attractive banking market;

 

   

the opportunity to accelerate Fifth Third’s Chicago region expansion strategy;

 

   

the opportunity to market Fifth Third’s broader product suite and drive deeper product penetration within MB Financial’s client base;

 

   

the opportunity to increasingly support MB Financial’s clients and prospects with Fifth Third’s larger balance sheet; and

 

   

the opportunity to invest Fifth Third’s capital in a transaction that is expected to be earnings accretive and generate attractive returns by realizing sizeable cost synergies.

Fifth Third’s Board of Directors unanimously approved the merger agreement after Fifth Third’s senior management discussed with the board of directors a number of factors, including those described above and the

 

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business, assets, liabilities, results of operations, financial performance, strategic direction and prospects of MB Financial. Fifth Third’s Board of Directors did not consider it practicable to, and did not attempt to, quantify or otherwise assign relative weights to the specific factors it considered in reaching its determination. Fifth Third’s Board of Directors viewed its position as being based on all the information and the factors presented to and considered by it. In addition, individual directors may have given different weights to different information and factors.

It should be noted that this explanation of the Fifth Third Board of Directors’ reasoning and all other information presented in this section is forward-looking in nature, and therefore should be read in light of the factors discussed under the heading “Cautionary Statement Regarding Forward-Looking Statements” beginning on page 25.

Management and Board of Directors of Fifth Third After the Merger

Pursuant to the merger agreement, Fifth Third has agreed to appoint to its Board of Directors, as of the effective time of the merger, two members of the MB Financial Board of Directors as mutually agreed by Fifth Third and MB Financial. At least one of the two directors so appointed must be an independent director of MB Financial. Fifth Third agreed to include these two directors in the slate of directors at the next annual meeting of Fifth Third’s shareholders to occur after the effective time of the merger. As of the date of this proxy statement/prospectus, MB Financial and Fifth Third have not selected any members of MB Financial’s Board of Directors for appointment to the Fifth Third Board of Directors. Information regarding current directors of Fifth Third and MB Financial, including biographical information, compensation and stock ownership, can be found in each of Fifth Third’s and MB Financial’s proxy statements for their respective 2018 annual meetings of stockholders, which are filed with the SEC and incorporated by reference into this proxy statement/prospectus. See “Where You Can Find More Information” in the forepart of this proxy statement/prospectus.

Interests of MB Financial Directors and Executive Officers in the Merger

In considering the recommendations of the MB Financial Board of Directors, MB Financial stockholders should be aware that certain directors and executive officers of MB Financial have interests in the merger that may be different from, or in addition to, the interests of MB Financial stockholders generally. These interests are described below. The MB Financial Board of Directors was aware of these interests and considered them, among other matters, in approving the merger agreement and in recommending that MB Financial preferred stockholders approve the preferred stockholder merger proposal and that MB Financial common stockholders approve the common stockholder merger proposal and the charter amendment proposal. The completion of the transactions contemplated by the merger agreement will constitute a change in control for purposes of all MB Financial agreements and plans described below.

Certain Assumptions

Except as otherwise specifically noted, for purposes of quantifying the potential payments and benefits described in this section, the following assumptions were used:

 

 

the relevant price per share of MB Financial common stock is $50.41, which is the average closing price per share of MB Financial’s common stock as quoted on the NASDAQ over the first five business days following the first public announcement of the merger on May 21, 2018;

 

 

the effective time is January 31, 2019, which is the assumed date of the closing of the merger solely for purposes of the disclosure in this section;

 

 

annual bonuses for 2018 are earned at 100% of target and the number of shares of MB Financial common stock earned under outstanding performance share unit awards is equal to the maximum of 175% of the performance share units covered by the award;

 

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the employment of each executive officer of MB Financial is terminated without cause or due to resignation for good reason (as such terms are defined in the relevant MB Financial plans and agreements), in each case immediately following the assumed effective time of January 31, 2019; and

 

 

the service of each non-employee director of MB Financial is terminated immediately following the effective time.

The description included below, including quantification of potential payments and benefits, does not take into account certain other compensation actions that MB Financial is permitted to take prior to the completion of the merger, as described in the section entitled “The Merger Agreement—Covenants and Agreements—Conduct of Businesses Prior to the Completion of the Merger” beginning on page 86 of this proxy statement/prospectus.

MB Financial Equity Awards

MB Financial has granted equity awards to its executive officers and directors under its Third Amended and Restated Omnibus Incentive Plan (which we refer to as the “MB Financial Omnibus Incentive Plan”). The MB Financial Omnibus Incentive Plan provides that unvested awards do not automatically vest in the event of a change in control so long as the awards are continued as a qualifying replacement award after the change in control. A replacement award qualifies if the award has a value at least equal to the replaced award, the award relates to publicly-traded securities of the successor following the change in control, and the award has terms and conditions (such as vesting and time of payment) not less favorable than in effect prior to the change in control. However, vesting, exercisability and payment of the replacement awards will accelerate in the event of an involuntary termination of employment (including a resignation for good reason) under circumstances in which severance benefits become payable or upon cessation of service as a director. If not replaced by a qualifying replacement award, the vesting and payment of the MB Financial equity awards would accelerate upon the change in control.

The merger agreement provides that Fifth Third will assume the MB Financial stock option, restricted stock, restricted stock unit and performance share unit awards outstanding at the effective time as described below, and that each assumed award will qualify as a replacement award.

Treatment of Outstanding Stock Options. At the effective time, each outstanding and unexercised option granted by MB Financial to purchase shares of MB Financial common stock will be converted into an option, on the same terms and conditions, including vesting, as were applicable prior to the merger, to purchase a number of Fifth Third common shares (rounded down to the nearest whole share) equal to the product of (a) the number of shares of MB Financial common stock subject to such option and (b) the Fifth Third equity award exchange ratio, with an exercise price per Fifth Third common share (rounded up to the nearest whole cent) equal to the quotient obtained by dividing (x) the exercise price per share of MB Financial common stock of such MB Financial stock option by (y) the Fifth Third equity award exchange ratio.

Treatment of Restricted Stock Awards. At the effective time, each outstanding MB Financial restricted stock award will be converted into the number of whole Fifth Third common shares (rounded to the nearest whole share) equal to the product of (a) the number of shares of MB Financial common stock underlying such award and (b) the Fifth Third equity award exchange ratio, subject to the same terms and conditions, including vesting and cash dividend equivalents, as were applicable to such awards prior to the merger.

Treatment of Restricted Stock Unit Awards. At the effective time, each outstanding MB Financial restricted stock unit will be converted into a restricted stock unit for a number of whole Fifth Third common shares (rounded to the nearest whole share) equal to the product of (a) the number of shares of MB Financial common stock subject to such award and (b) the Fifth Third equity award exchange ratio, subject to the same terms and conditions, including vesting and cash dividend equivalents, as were applicable to such awards prior to the merger.

 

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Treatment of Performance Share Unit Awards. At the effective time, each outstanding MB Financial performance share unit will be converted into a restricted stock unit for a number of whole Fifth Third common shares (rounded to the nearest whole share) equal to the product of (a) the number of shares of MB Financial common stock subject to such award and (b) the Fifth Third equity award exchange ratio, subject to the same terms and conditions, including vesting and cash dividend equivalents, as were applicable to such awards prior to the merger. Under each outstanding MB Financial performance share unit award, the number of MB Financial shares earned is based upon the total stockholder return of MB Financial common stock measured against the total stockholder return performance of approximately 50 financial institutions in the KBW Nasdaq Bank Index over a three-year performance period (subject to earlier termination in the event of a change in control) commencing on the grant date of the award. As a result of the change in control which will occur at the effective time, each performance period will end five trading days prior to the effective time and the MB Financial compensation committee will determine the number of shares of MB Financial common stock earned, which may range from 0% to 175% of the performance share units under the award, based on the relative total stockholder return during the applicable performance period using the per share value of MB Financial common stock as of the effective time.

See the section entitled “Merger-Related Compensation of MB Financials Named Executive Officers” beginning on page 75 of this proxy statement/prospectus for an estimate of the value of the unvested equity awards held by each of MB Financial’s named executive officers that would become vested upon a qualifying termination following the effective time. Based on the assumptions described above under “Interests of MB Financial’s Directors and Executive Officers in the Merger—Certain Assumptions,” (i) the estimated aggregate value of the unvested equity awards held by MB Financial’s two executive officers who are not named executive officers that would become vested upon a qualifying termination immediately following the effective time is $3,406,220 and (ii) the estimated aggregate value of the unvested MB Financial restricted stock unit awards held by MB Financial’s non-employee directors that would become vested at the effective time is $125,000. Additional information on equity holdings of MB Financial’s executive officers and non-employee directors can be found under the section entitled “Voting Securities and Certain Holders Thereof “ in MB Financial’s definitive proxy statement filed with the SEC on April 3, 2018, which is incorporated by reference into this proxy statement/prospectus. See “Incorporation of Certain Documents by Reference” on page 133 of this proxy statement/prospectus.

Employment, Severance and Tax Gross-Up Agreements; Other Arrangements

Employment Agreement with Mitchell Feiger. MB Financial is a party to a December 2008 employment agreement with Mr. Feiger. The employment agreement provides that if Mr. Feiger is involuntarily terminated in connection with or within 18 months following a change in control, he will be entitled to receive certain severance benefits in addition to other vested amounts. The term “involuntary termination” is defined to include termination of Mr. Feiger’s employment (other than for cause or due to death, disability or specified misconduct on his part under the federal banking laws) without his consent, or by Mr. Feiger following a material breach of the agreement by MB Financial or its successor, including, a material reduction of or interference with his duties, responsibilities (including failure to maintain his position as chief executive officer of MB Financial or its ultimate parent entity) or benefits without his consent. In the event Mr. Feiger’s employment terminates after the effective time under circumstances entitling him to severance benefits under the employment agreement, he will be entitled to:

 

   

a lump sum cash severance payment equal to three times the sum of his then current base salary and annual target bonus;

 

   

a fully-vested employer contribution to his account under the MB Financial Non-Stock Deferred Compensation Plan of approximately three times the amount of such contribution for the current year;

 

   

accelerated vesting and exercisability of all unvested stock options;

 

   

accelerated payment of all unvested restricted stock unit and performance share unit awards;

 

   

amounts, if any, payable under his tax gross-up agreement; and

 

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previously vested amounts payable in accordance with the employment agreement or applicable benefit plan.

Mr. Feiger’s right to receive severance benefits under his employment agreement is contingent upon his execution of a release of claims. The employment agreement imposes non-competition and non-solicitation covenants that will apply for one year following the termination of Mr. Feiger’s employment for any reason. If Mr. Feiger breaches these covenants following an involuntary termination of his employment, the Company will be entitled to recover any amounts paid to him as a result of that termination.

Employment Agreement with Mark. Hoppe. MB Financial is party to an October 2017 amended and restated employment agreement with Mr. Hoppe. Under the employment agreement, upon an involuntary termination of Mr. Hoppe’s employment in connection with or within 24 months following a change in control occurring prior to 2020, Mr. Hoppe will be entitled to:

 

   

a lump sum cash severance payment equal to three times his annual base salary and annual target bonus (based on the base salary and target annual bonus in effect in 2017);

 

   

premium reimbursements for up to 18 monthly payments equal to 150% of the monthly premium paid by him for COBRA coverage;

 

   

accelerated vesting and exercisability of all unvested stock options;

 

   

accelerated payment of all unvested restricted stock unit and performance share unit awards; and

 

   

previously vested amounts payable in accordance with the employment agreement or applicable benefit plan.

The term “involuntary termination” is defined to include termination of Mr. Hoppe’s employment (other than for cause or due to death, disability or specified misconduct on his part under the federal banking laws) without his consent, or by Mr. Hoppe following a material breach of the agreement by MB Financial or its successor, including, a material reduction of or interference with his duties, responsibilities (including failure to maintain his position as chairman or co-chairman of the board of directors of MB Financial Bank, N.A. or its successor) or benefits without his consent. Mr. Hoppe’s right to severance benefits under his employment agreement is contingent upon his execution of a release of claims, as well as his compliance with confidentiality and non-solicitation covenants contained in a separate protective covenants agreement.

Mr. Hoppe is not party to a tax gross-up agreement. Mr. Hoppe’s employment agreement provides that if the payments and benefits under the agreement in connection with a change in control would be subject to an excise tax by reason of Internal Revenue Code Sections 280G and 4999, then such payments and benefits will be reduced to one dollar below the threshold level for application of the tax, unless such reduced amount is less than the net amount of such payments and benefits after payment of the excise tax, in which case no reduction will be made.

Change in Control Severance Agreements with Executive Officers other than Messrs. Feiger and Hoppe. MB Financial has entered into change in control severance agreements (referred to as CIC severance agreements) with each of its executive officers (other than Messrs. Feiger and Hoppe).

Each CIC severance agreement provides that if a change in control occurs, and within 24 months thereafter the executive’s employment is involuntarily terminated without cause or the executive voluntarily terminates his or her employment for good reason, he or she will be entitled to:

 

   

a lump sum cash severance payment amount equal to two times the sum of the executive’s annual base salary plus the executive’s average annual bonus over the last two complete calendar years;

 

   

continuation of health, dental, long-term disability and group term life insurance coverage at the same premium cost to the executive until the second anniversary of the executive’s termination date, subject

 

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to earlier discontinuation if the executive receives substantially similar benefits from a subsequent employer;

 

   

accelerated vesting and exercisability of all unvested stock options;

 

   

accelerated payment of all unvested restricted stock unit and performance share unit awards; and

 

   

previously vested amount payable in accordance with the CIC severance agreement or applicable benefit plan.

The CIC severance agreements with Randall T. Conte and Mark A. Heckler provide that if the payments and benefits under the agreement in connection with a change in control would be subject to an excise tax by reason of Internal Revenue Code Sections 4999 and 280G, then such payments and benefits will be reduced to one dollar below the threshold level for application of the tax, unless such reduced amount is less than the net amount of such payments and benefits after payment of the excise tax, in which case no reduction will be made.

Tax Gross Up Agreements. MB Financial is party to legacy tax gross-up agreements with each of its executive officers other than Messrs. Hoppe, Conte and Heckler. Each tax-gross up agreement includes a modified gross-up provision providing that the executive officer will be entitled to a full gross-up if the payments and benefits to the officer in connection with a change in control would be subject to an excise tax by reason of Internal Revenue Code Sections 280G and 4999 and the amount of such payments exceed the threshold level for application of such tax by more than 10%; if such excess equals or is less than 10%, the payments will instead be reduced below the threshold.

Other Arrangements. Under the merger agreement, Fifth Third acknowledged and agreed that the closing of the merger will constitute “good reason” (or words of similar import) under the employment and CIC severance agreements of each MB Financial executive officer. As a result, each MB Financial executive officer will have the right to resign for good reason following the effective time and receive the severance and other benefits described above for a period of time as specified in his/her employment and/or CIC severance agreements, as applicable. Prior to the effective time, Fifth Third may enter into retention or other arrangements with some or all of the MB Financial executive officers for the purposes of securing the continued employment of such executive officers after the closing of the merger. No such agreements have been entered into as of the date of the proxy statement/prospectus.

Under the merger agreement, Fifth Third agreed that MB Financial may enter into agreements with each of its executive officers to provide post-employment access to health care coverage for each such officer and his or her eligible dependents until the officer becomes eligible for Medicare benefits. This access to post-employment health coverage will be available only if at the time of termination the executive officer has attained age 55 and the officer pays the monthly COBRA premium for such coverage.

See the section entitled “Merger-Related Compensation for MB Financial’s Named Executive Officers” beginning on page 75 of this proxy statement/prospectus for an estimate of the value of the severance benefits any tax gross-up payments payable to MB Financial’s named executive officers upon a qualifying termination following the effective time.

Based on the assumptions described above under “Interests of MB Financial’s Directors and Executive Officers in the Merger—Certain Assumptions,” the estimated aggregate cash severance payments payable to MB Financial’s two executive officers who are not named executive officers upon a qualifying termination following the effective time equal $2,946,250 and no tax gross-up payments would be due.

Nonqualified Deferred Compensation Plans

Certain employees and directors of MB Financial and MB Financial Bank are eligible to participate in the MB Financial Non-Stock Deferred Compensation Plan and MB Financial Stock Deferred Compensation Plan (which

 

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we refer collectively to as the “MB Financial Deferred Compensation Plans”), under which participants accumulate benefits based on voluntary deferral and, in the case of employee-participants, contributions by MB Financial. The MB Financial Deferred Compensation Plans provide that from and after a change in control, no amendments may be made to such plans that would have an “adverse” effect on a participant without such participant’s consent. An “adverse” amendment would include, but not be limited to, termination of the plans or any amendment that would cause an acceleration of the payment of benefits under such plans. As of the date of this proxy statement/prospectus, all amounts credited to the executive officers and directors under the MB Financial Deferred Compensation Plans are fully vested. Amounts credited to accounts under the MB Financial Stock Deferred Compensation Plan will be converted into the right to receive the merger consideration and shall be payable in accordance with the terms of the plan.

Future Compensation Actions

In addition to the payments and benefits above, under the terms of the merger agreement, MB Financial may take certain compensation actions prior to completion of the merger that will affect MB Financial’s directors and executive officers, although determinations related to such actions have not been made as of the date of this proxy statement/prospectus and the impact of such actions is not reflected in the amounts estimated above unless specifically disclosed. Among other actions, MB Financial may determine and approve annual incentives for 2018 based on actual performance, with payments at no less than 75% of target bonus, make certain long-term incentive grants to its employees and directors under the MB Financial Omnibus Incentive Plan if the effective time has not occurred by March 1, 2019 on terms and conditions substantially similar to those grants made by MB Financial in 2018, and establish a cash transition and retention program. In addition, MB Financial may take certain actions to mitigate adverse tax consequences under Sections 280G and 4999 of the Internal Revenue Code. Such actions may, subject to consultation with Fifth Third, include making payment in 2018 of all or a portion of the annual incentives for 2018 and accelerating the vesting and payment of MB Financial equity awards scheduled to vest and be paid during the first quarter of 2019.

Indemnification and Insurance

Pursuant to the terms of the merger agreement, MB Financial directors, officers, employees and employee benefit plan fiduciaries will be entitled to certain ongoing indemnification and coverage under directors’ and officers’ liability insurance and similar policies concerning fiduciaries following the merger. Such indemnification and insurance coverage is further described in the section entitled “The Merger Agreement—Covenants and Agreements—Indemnification and Directors’ and Officers’ Insurance” beginning on page 91 of this proxy statement/prospectus.

Board Membership

Under the merger agreement at the effective time, Fifth Third will appoint two current directors of MB Financial to the Fifth Third Board of Directors and will nominate the appointees for election as directors at Fifth Third’s next annual meeting of stockholders. The MB Financial directors to be appointed (at least one of whom shall be an independent MB Financial director) are to be mutually agreed upon by MB Financial and Fifth Third. As of the date of this proxy statement/prospectus, MB Financial and Fifth Third have not selected any members of MB Financial’s Board of Directors for appointment to the Fifth Third Board of Directors.

Merger-Related Compensation for MB Financial’s Named Executive Officers

In order to comply with the requirements of Item 402(t) of the SEC’s Regulation S-K, the following table and the related footnotes provide information about the compensation which may be paid to MB Financial’s named executive officers that is based on or otherwise relates to the merger (“merger-related compensation”). The compensation shown in this table and described in the footnotes to the table is the merger-related compensation that is the subject of the merger-related proposal, a non-binding, advisory vote of the MB Financial stockholders

 

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at the MB Financial special meeting, as described in “MB Financial Proposals—Merger-Related Compensation Proposal” beginning on page 41. The figures in the table are estimated based on compensation received during 2018 through the date of this proxy statement/prospectus, continuation of current compensation levels thereafter and an assumed effective date of January 31, 2019, for both the merger and termination of the named executive officer’s employment under circumstances entitling him or her to severance benefits. The amounts reported below are estimates based on multiple assumptions that may or may not actually occur or be accurate on the relevant date, including assumptions described in this proxy statement/prospectus, and do not reflect the value arising from certain compensation actions that may occur before the completion of the merger (such as the awarding of annual bonus compensation for 2018, the grant of annual equity awards which may occur in 2019 or actions taken to mitigate adverse tax consequences under Sections 280G and 4999 of the Internal Revenue Code), as described in “Interests of MB Financial Directors and Executive Officers in the Merger—Future Compensation Actions” beginning on page 75. Receipt of severance payments and benefits pursuant to a named executive officer’s employment or CIC severance agreement is conditioned upon the named executive officer’s execution of a release of claims and compliance with post-termination restrictions on actions including solicitation of customers and use of confidential information, as described in “Interests of MB Financial Directors and Executive Officers in the Merger” beginning on page 70. As required by applicable SEC rules, all amounts below determined using the per share value of MB Financial common stock have been calculated based on a per share price of MB Financial common stock of $50.41 (the average closing market price of MB Financial common stock over the first five business days following the public announcement of the merger on May 21, 2018). The amounts below do not reflect the effect of reductions in the amount of severance benefits or gross-up payments which may be required or which may result from actions taken to mitigate the adverse tax consequences under Sections 280G and 4999 of the Internal Revenue Code. As a result of the foregoing assumptions, the actual amounts, if any, to be received by a named executive officer may materially differ from the amounts set forth below.

GOLDEN PARACHUTE COMPENSATION

 

Name

   Cash(1)      Equity(2)      Pension/
NQDC(3)
     Perquisites/
Benefits(4)
     Tax
Reimbursements(5)
     Total  

Mitchell Feiger

   $ 5,827,500      $ 8,738,046      $ 516,723        —           $ 15,082,269  

Randall T. Conte

   $ 1,638,000      $ 1,887,003        —        $ 42,593         $ 3,567,192  

Mark A. Hoppe

   $ 3,708,975      $ 3,755,396        —              $ 7,463,427  

Jill E. York

   $ 1,785,750      $ 2,306,969        —        $ 41,628         $ 4,143,913  

Mark A. Heckler

   $ 1,670,000      $ 2,009,498        —        $ 61,827         $ 3,740,767  

 

1.

Cash. These amounts represent the aggregate value of cash severance related to base salary, target or average annual bonus and, for Mr. Hoppe, health care premium payments, upon a qualifying termination under the named executive officer’s employment or CIC severance agreement as described in “Interests of MB Financial Directors and Executive Officers in the Merger” beginning on page 70. The following table lists the respective portions of the amount set forth in this column that are attributable to the base salary severance payment, target or average annual bonus severance payment and health care premium payments.

 

Name

   Base Salary Severance      Target
Annual/Average
Bonus Severance
     Health Care Premiums
Severance
 

Mitchell Feiger

   $ 2,775,000      $ 3,052,500     

Randall T. Conte

   $ 928,000      $ 710,000     

Mark A. Hoppe

   $ 2,100,000      $ 1,575,000      $ 33,975  

Jill E. York

   $ 1,002,000      $ 783,750     

Mark A. Heckler

   $ 928,000      $ 742,000     

 

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2.

Equity. These amounts represent the aggregate value of unvested equity awards payable upon a qualifying termination under the MB Financial Omnibus Incentive Plan, as described in “Interests of MB Financial Directors and Executive Officers in the Merger.” Mr. Feiger is retirement eligible under the terms of his stock option, restricted stock unit and performance share unit awards such that he would continue to vest in such awards following termination of employment at any time. Because the vesting and payment of such amounts will accelerate upon termination following the merger, the value of such outstanding unvested stock options, restricted stock unit and performance share unit awards has been included in the table. The following table sets forth the values of unvested MB Financial restricted stock, restricted stock unit and performance share unit awards and the aggregate spread value in the unvested options.

 

Name

   Stock Options      Restricted
Stock/Units
     Performance Share Units  

Mitchell Feiger

   $ 522,613      $ 2,306,257      $ 5,909,176  

Randall T. Conte

   $ 112,553      $ 521,797      $ 1,252,652  

Mark A. Hoppe

   $ 241,652      $ 958,675      $ 2,555,070  

Jill E. York

   $ 140,526      $ 648,106      $ 1,518,337  

Mark A. Heckler

   $ 115,590      $ 585,440      $ 1,308,467  

For purposes of the foregoing table: (i) stock options are valued at the excess of $50.41, the assumed price per share of MB Financial common stock for purposes of this section, over the applicable per share exercise price, (ii) restricted stock units are valued at $50.41 multiplied by the number of outstanding unvested units, and (iii) performance share units are valued at $50.41 multiplied by the number of outstanding unvested performance share units (performance being based on attainment of the maximum level of performance solely for purposes of estimating the value of awards in this section, even though actual performance for the applicable performance period may differ from maximum performance). The value of the restricted stock units and performance share units also includes the amount of cash dividend equivalents expected to be credited under such units as of January 31, 2019, the assumed effective date of the merger for purposes of this section, based upon MB Financial’s current quarterly dividend of $0.24 per share.

The amounts set forth in the forgoing table are based on the assumption that the closing of the merger and termination of employment occur on January 31, 2019. Following is the portion of the amounts included in the foregoing table that would vest during February 2019 under the existing terms of the awards.

 

Name

   Stock Options      Restricted
Stock/Units
     Performance Share
Units
     Total  

Mitchell Feiger

   $ 237,454      $ 959,229      $ 2,161,000      $ 3,357,682  

Randall T. Conte

   $ 53,588      $ 232,042      $ 498,151      $ 742,655  

Mark A. Hoppe

   $ 133,218      $ 472,569      $ 1,250,564      $ 1,856,351  

Jill E. York

   $ 67,752      $ 290,951      $ 639,593      $ 998,295  

Mark A. Heckler

   $ 52,830      $ 255,691      $ 494,723      $ 803,245  

 

3.

Pension/NQDC. The amount for Mr. Feiger represents the employer contribution to be credited to Mr. Feiger’s account under the MB Financial Deferred Compensation Plans at the effective time in accordance with his employment agreement described in “Interests of MB Financial Directors and Executive Officers in the Merger” beginning on page 70. The amount is equal to the present value of annual contributions equal to 20% of his base salary that would be credited at each of the three calendar-year ends following the date of a change in control assuming his employment continued through such dates.

 

4.

Perquisites/Benefits. These amounts represent the aggregate value of continuing welfare benefits to which the executives are entitled under their employment or CIC severance agreements, as described in “Interests of MB Financial Directors and Executive Officers in the Merger” beginning on page 70. The following table sets forth the values of continuing welfare benefits based upon the 2018 premiums paid by MB Financial for such benefits, assuming a 5% annual increase in premium and a discount rate of 3.05%. No amounts have been included for Mr. Feiger or Mr. Hoppe because Mr. Feiger is currently entitled to post-

 

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  employment welfare benefits under his employment agreement whether or not the merger occurs, and Mr. Hoppe is entitled to the health care premium severance payments described above.

 

Name

   Welfare Benefits  

Mitchell Feiger

     —    

Randall T. Conte

   $ 42,593  

Mark A. Hoppe

     —    

Jill E. York

   $ 41,628  

Mark A. Heckler

   $ 61,827  

 

5.

Tax Reimbursement. Based upon the assumptions set forth above, including but not limited to the January 31, 2019 assumed closing date for the merger, no payments would be due to any executive officers under the tax gross-up agreements described in “Interests of MB Financial Directors and Executive Officers in the Merger” beginning on page 70.

Dividends/Distributions

From and after the date of the merger agreement, May 20, 2018, MB Financial may not, and may not permit its subsidiaries to, without the prior written consent of Fifth Third, make any dividend payments or distributions other than (i) regular quarterly cash dividends by MB Financial at a rate not in excess of $0.24 per share of MB Financial common stock, (ii) quarterly cash dividends on the MB Financial preferred stock in accordance with the terms of the preferred stock, (iii) distributions paid on trust preferred securities, and (iv) dividends paid by any of MB Financial’s subsidiaries to MB Financial or any of MB Financial’s wholly owned subsidiaries.

The merger agreement provides that Fifth Third and MB Financial must coordinate with one another with respect to the declaration of dividends in respect of Fifth Third common shares and MB Financial common stock, and the record dates and payment dates with respect thereto, with the intention that the holders of MB Financial common stock should not receive two dividends, or fail to receive a dividend, in any quarter with respect to their shares of MB Financial common stock and any Fifth Third common shares they receive in exchange therefor in the merger.

After the effective time, no dividends or other distributions declared or made with respect to Fifth Third common shares or new Fifth Third preferred shares, if applicable, will be paid to the holder of any unsurrendered certificate or book entry share that evidenced ownership of shares of MB Financial common stock or MB Financial preferred stock until such holder properly surrenders such shares. See “—Conversion of Shares; Exchange and Payment Procedures” beginning on page 47.

 

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REGULATORY APPROVALS REQUIRED FOR THE MERGER

Completion of the merger is subject to the receipt of all approvals required to complete the transactions contemplated by the merger agreement (i) from the Federal Reserve Board, (ii) from the Ohio Department of Commerce, Division of Financial Institutions (which we refer to as the “Ohio DFI”), (iii) if required, under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (which we refer to as the “HSR Act”) and (iv) any other regulatory approval the failure of which to obtain would reasonably be expected to have a material adverse effect on Fifth Third, and the expiration of any applicable statutory waiting periods, in each case, without the imposition of a materially burdensome regulatory condition. Notifications and/or applications requesting approval may also be submitted to various other federal and state regulatory authorities and self-regulatory organizations. Fifth Third and MB Financial have agreed to use their reasonable best efforts to obtain all required regulatory approvals. Fifth Third, MB Financial and/or their respective subsidiaries have filed, or are in the process of filing, applications and notifications to obtain these regulatory approvals.

Although we currently believe we should be able to obtain all required regulatory approvals in a timely manner, we cannot be certain when or if we will obtain them or, if obtained, whether they will contain terms, conditions or restrictions not currently contemplated that will be detrimental to Fifth Third after the completion of the merger, or will contain a materially burdensome regulatory condition.

Federal Reserve Board. Completion of the merger is subject, among other things, to approval by the Federal Reserve Board pursuant to Section 3 of the Bank Holding Company Act of 1956, as amended (which we refer to as the “BHC Act”). In considering the approval of an application under Section 3 of the BHC Act, the Federal Reserve Board reviews certain factors, including: (1) the financial and managerial resources of the bank holding companies and banks involved and the future prospects of the combined organization (including consideration of the current and projected capital positions and levels of indebtedness), (2) the effect of the proposal on competition, (3) the extent to which the proposal would result in greater or more concentrated risks to the stability of the United States banking or financial system, (4) the convenience and needs of the communities to be served and (5) the effectiveness of the companies in combating money laundering.

The Federal Reserve Board also reviews the records of performance of the relevant insured depository institutions under the Community Reinvestment Act of 1977 (which we refer to as the “CRA”) and considers the concentration of deposits on a nationwide basis. In their most recent respective CRA examinations, Fifth Third Bank and MB Financial Bank each received an overall “Outstanding” CRA performance rating.

Following the completion of the merger, Fifth Third intends to merge MB Financial Bank with and into Fifth Third Bank, with Fifth Third Bank surviving the merger (which we refer to as the “bank merger”). The bank merger will be subject to approval by the Federal Reserve Board under Section 18(c) of the Federal Deposit Insurance Act (the “Bank Merger Act”). In evaluating an application filed under the Bank Merger Act, the Federal Reserve Board considers: (1) the competitive impact of the transaction, (2) financial and managerial resources and future prospects of the existing and insured depository institutions which are parties to the bank merger, (3) the convenience and needs of the community to be served and the records of the insured depository institutions under the Community Reinvestment Act, (4) the insured depository institutions’ effectiveness in combating money-laundering activities and (5) the extent to which the bank merger would result in greater or more concentrated risks to the stability of the U.S. banking or financial system. Fifth Third Bank’s establishment and operation of branches at MB Financial Bank’s existing branch locations is also subject to approval under Section 9 of the Federal Reserve Act.

Furthermore, the BHC Act, the Bank Merger Act and Federal Reserve Board regulations require published notice of, and the opportunity for public comment on, the applications to the Federal Reserve Board, and authorize the Federal Reserve Board to hold a public hearing or meeting if the Federal Reserve Board determines that a hearing or meeting would be appropriate. The Federal Reserve Board takes into account the views of third party commenters, particularly on the subject of the merging parties’ CRA performance and record of service to their

 

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communities, and any hearing, meeting or comments provided by third parties could prolong the period during which the application is under review by the Federal Reserve Board. Fifth Third filed its applications with the Federal Reserve Board under the BHC Act and the Bank Merger Act on June 12, 2018.

In addition to the Federal Reserve Board, the Antitrust Division of the Department of Justice (which we refer to as the “DOJ”) conducts a concurrent competitive review of the merger to analyze the transaction’s competitive effects and determine whether the transaction would result in a violation of the antitrust laws. After the Federal Reserve Board approves the transaction, the parties generally must wait at least 30 days to complete the transaction, during which time the DOJ may bring a court action challenging the transaction on antitrust grounds. With the approval of the Federal Reserve Board and the concurrence of the DOJ, the waiting period may be reduced to no less than 15 days. The commencement of an antitrust action would stay the effectiveness of such an approval unless a court specifically ordered otherwise. In reviewing the antitrust aspects of the transaction, the DOJ generally analyzes the competitive effects of the transaction differently than the Federal Reserve Board, and thus it is possible that the DOJ could reach a different conclusion than the Federal Reserve Board does regarding the merger’s effects on competition. A determination by the DOJ not to object to the merger may not prevent the filing of antitrust actions by private persons or state attorneys general. Fifth Third and MB Financial believe that the merger should not raise significant regulatory concerns and that Fifth Third will be able to obtain all requisite regulatory approvals in a timely manner if required by regulators. However, there can be no assurance if and when DOJ clearance will be obtained, or as to the conditions or limitations that such DOJ approval may contain or impose.

Ohio Department of Commerce, Division of Financial Institutions. The bank merger must be approved by the Ohio DFI under Chapter 1115 of Title 11 of the Ohio Revised Code. In considering an application under Chapter 1115, the Ohio DFI may consider a variety of factors including: (1) the competitive consequences of the proposed transaction, (2) the financial and managerial resources and future prospects of the banks involved, (3) the convenience and needs of the communities to be served, and (4) the comments of any other regulatory relevant authority. Fifth Third filed its application with the Ohio DFI on June 12, 2018.

OCC. MB Financial Bank is regulated by the Office of the Comptroller of the Currency (“OCC”). As required by OCC regulation, a notice was filed with the OCC on June 14, 2018 advising the agency that MB Financial Bank intends to merge with and into Fifth Third Bank.

There can be no assurances that the regulatory approvals discussed above will be received on a timely basis, or as to the ability of Fifth Third and MB Financial to obtain the approvals on satisfactory terms or the absence of litigation challenging such approvals. In recent similar transactions, the Federal Reserve Board has taken a longer time to render a decision on applications than the typical time period for approval set forth in the Federal Reserve Board’s regulations. There can likewise be no assurances that U.S. federal or state regulatory authorities will not attempt to challenge the merger on antitrust grounds or for other reasons, or, if such a challenge is made, as to the result of such challenge.

 

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ACCOUNTING TREATMENT

In accordance with current accounting guidance, the merger will be accounted for using the acquisition method. As a result, the recorded assets and liabilities of Fifth Third will be carried forward at their recorded amounts, the historical operating results will be unchanged for the prior periods being reported on and the assets and liabilities of MB Financial will be adjusted to fair value at the date of the merger. In addition, all identified intangible assets will be recorded at fair value and included as part of the net assets acquired. To the extent that the purchase price, consisting of cash plus the number of Fifth Third common shares and shares of new Fifth Third preferred stock, if issuable, to be issued to former MB Financial stockholders, option holders and holders of restricted stock awards, restricted stock unit awards, performance-based awards and the MB Financial preferred stock, as applicable, at fair value, exceeds the fair value of the net assets acquired including identified intangible assets of MB Financial on the date the merger is completed, such amount will be reported as goodwill. In accordance with current accounting guidance, goodwill will not be amortized but will be evaluated for impairment annually. Identified finite life intangible assets will be amortized over their estimated lives. Further, the acquisition method of accounting will result in the operating results of MB Financial being included in the operating results of Fifth Third beginning from the date of completion of the merger.

 

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PUBLIC TRADING MARKETS

Fifth Third common shares are listed on the NASDAQ under the symbol “FITB.” MB Financial common stock and the depositary shares representing interests in MB Financial preferred stock are each listed on the NASDAQ under the symbols “MBFI” and “MBFIO”, respectively. Upon completion of the merger, the MB Financial common stock and the depositary shares representing interests in MB Financial preferred stock will be delisted from the NASDAQ and thereafter will be deregistered under the Exchange Act and MB Financial will no longer be required to file periodic reports with the SEC with respect to the MB Financial common stock and the depositary shares representing interests in MB Financial preferred stock. The Fifth Third common shares issuable in the merger will be listed on the NASDAQ. Prior to the effective time of the direct merger, Fifth Third will use its reasonable best efforts to cause the new Fifth Third preferred stock, if issuable, (or depositary shares representing interests in the new Fifth Third preferred stock) to be approved for listing on the NASDAQ.

 

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RESALE OF FIFTH THIRD COMMON SHARES AND NEW FIFTH THIRD PREFERRED STOCK

All Fifth Third common shares and the new Fifth Third preferred stock (or depositary shares representing interests in the new Fifth Third preferred stock) received by MB Financial stockholders in the merger, as applicable, will be freely tradable for purposes of the Securities Act of 1933, as amended (which we refer to as the “Securities Act”) and the Exchange Act, except for Fifth Third common shares and shares of new Fifth Third preferred stock (or depositary shares representing interests in the new Fifth Third preferred stock) received by any MB Financial stockholder who becomes an “affiliate” of Fifth Third after completion of the merger. This proxy statement/prospectus does not cover resales of Fifth Third common shares or the new Fifth Third preferred stock (or depositary shares representing interests in the new Fifth Third preferred stock) received by any person upon completion of the merger, as applicable, and no person is authorized to make any use of this proxy statement/prospectus in connection with any resale. At or promptly following the closing of the merger, Fifth Third expects to take the necessary steps to delist the depositary shares representing interests in MB Financial preferred stock from the NASDAQ and terminate MB Financial’s registration and reporting obligations with the SEC, so that the depositary shares representing interests in MB Financial’s preferred stock will no longer trade on the NASDAQ or any other securities exchange and MB Financial will no longer file reports or other public disclosure with the SEC under the Exchange Act.

 

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THE MERGER AGREEMENT

This section describes the material terms of the merger agreement. The description in this section and elsewhere in this proxy statement/prospectus is qualified in its entirety by reference to the complete text of the merger agreement, a copy of which is attached as Appendix A and is incorporated by reference into this proxy statement/prospectus. This summary does not purport to be complete and may not contain all of the information about the merger agreement that is important to you. You are encouraged to read the merger agreement carefully and in its entirety. This section is not intended to provide you with any factual information about Fifth Third or MB Financial. Such information can be found elsewhere in this proxy statement/prospectus and in the public filings Fifth Third and MB Financial make with the SEC, as described in the section entitled “Where You Can Find More Information” in the forepart of this proxy statement/prospectus.

Effects of the Merger; Merger Consideration

If the holders of MB Financial common stock approve the common stockholder merger proposal and the holders of MB Financial preferred stock approve the preferred stockholder merger proposal, then MB Financial will merge with and into Intermediary with Intermediary surviving the merger., which we have defined as the “direct merger.” The articles of incorporation and the regulations of Intermediary as in effect immediately prior to the direct merger will be the articles and regulations of the surviving company.

The merger agreement also provides that if the MB Financial preferred stockholders do not approve the preferred stockholder merger proposal, but the MB Financial common stockholders approve the common stockholder merger proposal and charter amendment proposal, then the acquisition of MB Financial will instead be effected by the merger of a newly-formed subsidiary of Fifth Third with an into MB Financial, with MB Financial surviving the merger, which we have defined as the “alternative merger.” Only if the preferred stockholder merger proposal is not approved by the MB Financial preferred stockholders will the alternative merger occur instead of the direct merger, if the MB Financial common stockholders approve the common stockholder merger proposal and the charter amendment proposal.

Each share of MB Financial common stock issued and outstanding immediately prior to the effective time of the merger (other than shares owned by MB Financial or Fifth Third), will be converted into the right to receive 1.45 Fifth Third common shares and $5.54 in cash. Each share of MB Financial preferred stock issued and outstanding immediately prior to the effective time of the direct merger will automatically be converted into a share of the new Fifth Third preferred stock. The new Fifth Third preferred stock will have substantially the same terms as the MB Financial preferred stock, except that the new Fifth Third preferred stock will have no voting rights (including upon an arrearage in the payment of dividends) except as required by Ohio law and will have certain other differing terms to be consistent with Fifth Third’s currently outstanding series of preferred stock and its articles of incorporation.

In the alternative merger, the holders of MB Financial common stock will receive the same merger consideration on the same terms as in the direct merger, but each share of the MB Financial preferred stock will not be converted into a share of the new Fifth Third preferred stock and will instead remain outstanding and unchanged (except as noted in the next sentence) as preferred stock of MB Financial, which will be a subsidiary of Fifth Third. Pursuant to the charter amendment, effective immediately prior to consummation of the alternative merger, the holders of MB Financial preferred stock will have the right to vote with the holders of MB Financial common stock as a single class on all matters submitted to a vote of such common stockholders. Upon completion of the alternative merger, Fifth Third, as the sole holder of MB Financial common stock, will control MB Financial. Following completion of the alternative merger, MB Financial preferred stockholders will vote with Fifth Third as a single class on all matters submitted to a vote of Fifth Third, as the sole common stockholder of MB Financial. Thus, the voting rights that would be conferred upon the MB Financial preferred stockholders by the charter amendment would continue to apply with respect to MB Financial, and not Fifth Third, following completion of the alternative merger.

 

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Fifth Third will not issue any fractional Fifth Third common shares in the merger. Instead, a MB Financial stockholder who otherwise would have received a fraction of a Fifth Third common share will receive an amount in cash (rounded to the nearest cent) determined by multiplying the fraction of the Fifth Third common share to which the holder would otherwise be entitled by the average closing sale prices of Fifth Third common shares on the NASDAQ as reported by the Wall Street Journal for the five full trading days ending on the trading day prior to the closing date of the merger.

Closing and Effective Time of the Merger

Unless the parties otherwise mutually agree, the closing of the merger will occur no later than three business days after the satisfaction or waiver of all the closing conditions, including the receipt of all required regulatory approvals and stockholder approvals and after the expiration of all regulatory waiting periods. See “The Merger Agreement—Conditions to the Merger” beginning on page 95 for a more complete description of the conditions that must be satisfied prior to closing.

On the closing date, the surviving corporation will effect the merger (whether as the direct merger or the alternative merger) legally by filing articles of merger with the Department of Assessments and Taxation of the State of Maryland and a certificate of merger with the Secretary of State of the State of Ohio. The merger will become effective upon filing or at such time as is specified in such articles of merger and certificate of merger. The time at which the merger becomes effective is sometimes referred to in this proxy statement/prospectus as the “effective time.”

As of the date of this proxy statement/prospectus, the parties expect that the merger will be effective in the first quarter of 2019. However, there can be no assurance as to when or if the merger will occur.

If the merger has not been consummated on or before May 20, 2019, the merger agreement may be terminated by either Fifth Third or MB Financial (except if the termination date is extended as noted in the next sentence), unless the failure of the closing to occur by such date is due to the failure of the party seeking to terminate the merger agreement to perform or observe the covenants and agreements of such party set forth in the merger agreement. However, if on the termination date all closing conditions are satisfied or capable of being satisfied other than the receipt of all required regulatory approvals, then the termination date may be extended for three months at the option of either Fifth Third or MB Financial. See the section below entitled “Termination; Termination Fee” beginning on page 96.

Treatment of MB Financial Stock Options and Other Equity Awards

In connection with the merger, each outstanding equity-based award granted under the equity incentive plans of MB Financial will either be assumed by Fifth Third or, to the extent not assumed, converted into the right to receive merger consideration. Specifically, all outstanding options to purchase shares of MB Financial common stock, as well as all restricted stock awards, restricted stock units and performance share unit awards, in each case, that do not automatically vest by the terms of such award, will be assumed by Fifth Third, and adjusted as follows.

Treatment of MB Financial Stock Option Awards. Assumed options will be adjusted so as to represent the right to acquire a number of Fifth Third common shares (rounded down to the nearest whole share) equal to the product of (i) the number of shares of MB Financial common stock subject to such assumed option immediately prior to the effective time multiplied by (ii) the sum of (a) the exchange ratio and (b) $5.54 divided by the average of the closing-sale prices of Fifth Third common shares on the NASDAQ as reported by The Wall Street Journal for the five full trading days ending on the trading day immediately preceding the closing date (we refer to such sum as the “Fifth Third equity award exchange ratio”), at an exercise price per Fifth Third common share (rounded up to the nearest whole cent) equal to the quotient obtained by dividing (x) the exercise price per share of MB Financial common stock of such MB Financial stock option by (y) the Fifth Third equity award exchange ratio.

 

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The assumed options will otherwise remain subject to the same terms and conditions (including, without limitation, vesting conditions) as were applicable to such option prior to assumption.

Treatment of MB Financial Restricted Stock Awards, Restricted Stock Unit Awards, and Performance Share Unit Awards. Assumed restricted stock awards, restricted stock unit awards, and performance share unit awards will be adjusted so that the holder of such award will be entitled to receive, upon vesting, a number of Fifth Third common shares based upon the product of (a) the number of shares of MB Financial common stock underlying such award multiplied by (b) the Fifth Third equity award exchange ratio, rounded, as applicable, to the nearest whole share (with 0.50 being rounded upward). The assumed restricted stock awards, restricted stock unit awards, and performance share unit awards shall otherwise subject to the same terms and conditions (including, without limitation, vesting conditions and cash dividend equivalents), as were applicable to such awards prior to the assumption.

Treatment of Other MB Financial Equity Awards. Each MB Financial equity-based award that is not assumed and adjusted under the merger agreement (in accordance with the terms set forth above) will be cancelled and converted automatically into the right to receive merger consideration.

Treatment of MB Financial’s Stock Deferred Compensation Plan. Each share of MB Financial common stock outstanding under the MB Financial’s Stock Deferred Compensation Plan will be deemed cancelled and converted into the right to receive the merger consideration; payment of such amount will otherwise remain subject to the terms and conditions of such plan.

Covenants and Agreements

Conduct of Businesses Prior to the Completion of the Merger. MB Financial has agreed that, prior to the effective time of the merger, except in connection with the discontinuation of MB Financial’s national mortgage origination business or as consented to by Fifth Third, MB Financial will conduct its businesses, and cause its subsidiaries to conduct their respective businesses, in the ordinary course consistent with past practice in all material respects and use reasonable best efforts to maintain and preserve intact its business organization, the services of its employees and its advantageous business relationships. MB Financial and Fifth Third have each agreed not to, and cause their respective subsidiaries not to, knowingly take any action that would reasonably be expected to adversely affect or materially delay the ability of MB Financial, Fifth Third or their respective subsidiaries to obtain any necessary regulatory approvals required for the transactions contemplated by the merger agreement or perform their respective covenants and agreements under the merger agreement or to consummate the transactions contemplated by the merger agreement.

In addition to the general covenants above, MB Financial has agreed that prior to the effective time of the merger, subject to specified exceptions, it will not, and will not permit its subsidiaries to, without the prior written consent of Fifth Third (which will not be unreasonably withheld, conditioned or delayed):

 

   

other than in the ordinary course of business consistent with past practice, incur any indebtedness for borrowed money (other than indebtedness of MB Financial or any of its wholly-owned subsidiaries to MB Financial or any of its subsidiaries), assume, guarantee, endorse or otherwise as an accommodation become responsible for the obligations of any other person (other than a subsidiary of MB Financial);

 

   

(i) adjust, split, combine or reclassify any capital stock; (ii) make, declare or pay any dividend, or make any other distribution on, or directly or indirectly redeem, purchase or otherwise acquire, any shares of its capital stock or any securities or obligations convertible (whether currently convertible or convertible only after the passage of time or the occurrence of certain events) into or exchangeable for any shares of its capital stock (except (A) regular quarterly cash dividends by MB Financial on the MB Financial common stock at a rate not in excess of $0.24 per share of MB Financial common stock, (B) quarterly cash dividends on the MB Financial preferred stock in accordance with the terms of the preferred stock, (C) distributions paid on trust preferred securities, (D) dividends paid by any of MB

 

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Financial’s subsidiaries to MB Financial or any of MB Financial’s wholly-owned subsidiaries, (E) the acceptance of shares of MB Financial common stock as payment for the exercise price of MB Financial stock options or for withholding taxes incurred in connection with the exercise of MB Financial stock options or the vesting or settlement of MB Financial equity awards or (F) to satisfy obligations under MB Financial benefit plans; (iii) grant any stock options, stock appreciation rights, performance shares, restricted stock unit awards, restricted shares or other equity-based awards or interests, or grant any person any right to acquire any shares of its capital stock; or (iv) issue, sell or otherwise permit to become outstanding any additional shares of capital stock or securities convertible or exchangeable into, or exercisable for, any shares of its capital stock or any options, warrants, or other rights of any kind to acquire any shares of capital stock, except in connection with the reinvestment of dividends pursuant to the MB Financial dividend reinvestment plan or pursuant to the exercise of MB Financial stock options or the vesting or settlement of MB Financial equity awards;

 

   

sell, transfer, mortgage, encumber or otherwise dispose of any of its material properties or assets or any business to any person other than a wholly-owned subsidiary, or cancel, release or assign any material indebtedness owed by any such person or any claims against any such person, in each case other than in the ordinary course of business consistent with past practice;

 

   

except for transactions in the ordinary course of business consistent with past practice (including by way of foreclosure or acquisitions of control in a fiduciary or similar capacity or in satisfaction of debts previously contracted in good faith), make any material investment either by purchase of stock or securities, contributions to capital, property transfers, or purchase of any property or assets of any other individual, corporation or other entity, other than a wholly owned subsidiary of MB Financial;

 

   

(i) terminate, materially amend, or waive any material provision of, any specified MB Financial material contract (as agreed among the parties), or make any change in any instrument or agreement governing the terms of any of its securities, or material lease or contract, other than normal renewals of contracts and leases without material adverse changes of terms with respect to MB Financial or (ii) enter into any contract that would constitute a material contract if it were in effect on the date of the merger agreement;

 

   

except as required by any benefits plan or arrangement, (i) increase the compensation or benefits payable to any current or former employee, individual independent contractor or director, except , (A) increases in annual base salary or wage rate in the ordinary course of business consistent with past practice that do not exceed 3.25% in the aggregate or (B) the payment of annual or other periodic cash bonuses for completed performance periods based on actual performance and paid in the ordinary course of business consistent with past practice; (ii) grant or award any bonus or cash incentive compensation or make any loans to any employee, individual independent contractor or director other than in the ordinary course of business consistent with past practice; (iii) enter into, adopt, amend or terminate any benefits plan or arrangement; (iv) take any action to accelerate the vesting or payment, or the funding of any payment or benefit under, any MB Financial benefits plan or arrangement, (v) discretionarily accelerate the vesting or payment of any equity or equity-based awards (vi) grant any severance, retention or termination pay to any employee, individual independent contractor or director; or (vii) enter into or adopt any collective bargaining agreement;

 

   

settle any material claim, suit, action or proceeding, except in the ordinary course of business consistent with past practice, in an amount and for consideration not in excess of $2,500,000 individually or $5,000,000 in the aggregate and that would not impose any material restriction on the business of MB Financial or its subsidiaries or the surviving corporation in the merger or any of its affiliates;

 

   

take any action or knowingly fail to take any action where such action or failure to act could reasonably be expected to prevent the merger from qualifying as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code;

 

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except for the charter amendment, amend MB Financial’s charter or bylaws or the comparable governing documents of its subsidiaries;

 

   

merge or consolidate itself or any of its subsidiaries with any other person, or restructure, reorganize or completely or partially liquidate or dissolve it or any of its subsidiaries;

 

   

materially restructure or materially change its investment securities or derivatives portfolio or its interest rate exposure through purchases, sales or otherwise, or the manner in which the portfolio is classified or reported, or purchase any security rated below investment grade, in each case, other than (i) in the ordinary course of business consistent with past practice or (ii) as may be required by applicable laws, regulations, guidelines or policies imposed by a governmental entity;

 

   

implement or adopt any change in its accounting principles, practices or methods, other than as may be required by GAAP with the concurrence of its independent registered public accountants;

 

   

enter into any material new line of business;

 

   

make any loans or extensions of credit, except in the ordinary course of business consistent with past practice, or new loans or extensions of credit in excess of $35,000,000 in a single transaction or renewals of loans or extensions of credit in excess of $50,000,000, in each case, except pursuant to existing commitments; provided, that Fifth Third must respond to any request for a consent to make such loan or extension of credit in writing within two business days after the loan package is delivered to Fifth Third;

 

   

make any material changes in its policies and practices with respect to (i) underwriting, pricing, originating, acquiring, selling, servicing or buying or selling rights to service, loans or (ii) investment, risk and asset liability management or hedging practices and policies, in each case except as may be required by such policies and practices or by any applicable laws, regulations, guidelines or policies imposed by any governmental entity;

 

   

make, or commit to make, any capital expenditures in excess of $5,000,000 in the aggregate, except as contemplated by the merger agreement;

 

   

make application for the opening, relocation or closing of any, or open, relocate or close any, material branch office, material loan production office or other significant office or operations facility of it or its Subsidiaries;

 

   

other than in the ordinary course of business consistent with past practice, make, change or revoke any material tax election, change an annual tax accounting period, adopt or change any material tax accounting method, file any amended material tax return, enter into any closing agreement with respect to a material amount of taxes, or settle any material tax claim, audit, assessment or dispute or surrender any right to claim a refund of a material amount of taxes; or

 

   

agree to take, make any commitment to take, or adopt any resolutions of its Board of Directors or similar governing body in support of the foregoing actions.

Fifth Third has agreed to a more limited set of restrictions on its business prior to the effective time of the merger. Specifically, Fifth Third has agreed that prior to the effective time of the merger, except as expressly contemplated or permitted by the merger agreement, as required by law or with the prior written consent of MB Financial (which will not be unreasonably withheld, conditioned or delayed), it will not:

 

   

except for an amendment as required to fix the terms of the new Fifth Third preferred stock, amend its articles of incorporation or its regulations in a manner that would adversely affect the economic benefits of the merger to the holders of MB Financial common stock;

 

   

adjust, split, combine or reclassify any of its capital stock;

 

   

adopt or publicly propose a plan of complete or partial liquidation or resolutions providing for or authorizing such a liquidation or a dissolution, in each case, of Fifth Third or Intermediary;

 

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take any action or knowingly fail to take any action where such action or failure to act could reasonably be expected to prevent the merger from qualifying as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code; or

 

   

agree to take, make any commitment to take, or adopt any resolutions of its Board of Directors or similar governing body in support of the foregoing actions.

Regulatory Matters. Fifth Third and MB Financial have agreed to promptly prepare and file with the SEC a registration statement on Form S-4, of which this proxy statement/prospectus is a part. Fifth Third and MB Financial have agreed to use reasonable best efforts to have the Form S-4 declared effective under the Securities Act as promptly as practicable after such filing and to keep the S-4 effective for so long as necessary to consummate the transactions contemplated by the merger agreement, and MB Financial will thereafter mail or deliver the proxy statement/prospectus to MB Financial’s stockholders. Fifth Third has also agreed to use its reasonable best efforts to obtain all necessary state securities law or “Blue Sky” permits and approvals required to carry out the transactions contemplated by the merger agreement, and MB Financial has agreed to furnish all information concerning MB Financial and the holders of MB Financial common stock and preferred stock as may be reasonably requested in connection with any such action. In addition, Fifth Third and MB Financial have agreed to file, and did file, no later than 20 business days following the date of the merger agreement, all applications and notices with governmental entities to obtain the requisite regulatory approvals for the merger and the bank merger.

Fifth Third and MB Financial have agreed to cooperate with each other and use, and cause their respective subsidiaries to use, their respective reasonable best efforts to promptly prepare and file all necessary documentation, to effect all applications, notices, petitions and filings, to obtain as promptly as practicable all permits, consents, approvals and authorizations of all third parties and governmental entities that are necessary or advisable to consummate the transactions contemplated by the merger agreement.

Additionally, each of Fifth Third and MB Financial has agreed to furnish, upon request, to the other all information concerning itself, its subsidiaries, directors, officers and stockholders and such other matters as may be reasonably necessary or advisable in connection with this proxy statement/prospectus, the Form S-4 or any other statement, filing, notice or application made by or on behalf of Fifth Third, MB Financial or any of their respective subsidiaries to any governmental entity in connection with the transactions contemplated by the merger agreement.

Fifth Third and MB Financial have each agreed to use its reasonable best efforts to (i) avoid the entry of, or to have vacated, lifted, reversed or overturned any decree, judgment, injunction or other order that would restrain, prevent or delay the closing of the merger and (ii) avoid or eliminate all impediments under applicable law so as to enable the closing of the merger to occur as soon as possible, provided that Fifth Third will not be required and MB Financial will not be permitted to take, or agree to take, any actions or agree to any condition or restriction, in connection with the grant of certain required regulatory approvals, that would reasonably be expected to result in a materially burdensome regulatory condition.

Stockholder Approval. MB Financial’s Board of Directors has resolved to recommend to the MB Financial common stockholders that they (i) approve the merger (in either form as the direct merger or as the alternative merger) and (ii) the charter amendment (provided that the amendment will only become effective immediately prior to the consummation of the alternative merger). MB Financial’s Board of Directors has also resolved to recommend to the MB Financial preferred stockholders that they approve the direct merger. MB Financial’s Board of Directors has resolved to convene and hold a meeting of the MB Financial common stockholders and preferred stockholders as soon as reasonably practicable after the Form S-4 is declared effective and to submit these matters to the MB Financial common stockholders and preferred stockholders and any other matters required to be approved by the MB Financial common stockholders and preferred stockholders in order to carry out the intentions of the merger agreement. However, if MB Financial’s Board of Directors, after receiving the

 

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advice of its outside counsel and financial advisors, determines in good faith that it would more likely than not result in a violation of its fiduciary duties under Maryland law to continue to recommend these matters to MB Financial stockholders, then MB Financial’s Board of Directors may submit these matters to its common and preferred stockholders without recommendation, provided that MB Financial’s Board of Directors may not withdraw or change its recommendation unless (i) it gives Fifth Third at least three business days’ prior written notice of its intention to do so and a reasonable description of the event or circumstances giving rise to its determination to take such action and (ii) at the end of such notice period, MB Financial’s Board of Directors takes into account any amendment or modification to the merger agreement proposed by Fifth Third and, after receiving the advice of its outside counsel and financial advisors, determines in good faith that it would nevertheless more likely than not result in a violation of its fiduciary duties under Maryland law to continue to recommend such matters to the MB Financial stockholders.

NASDAQ Listing. Fifth Third will (i) cause the Fifth Third common shares to be issued in connection with the merger to be approved for listing on the NASDAQ and (ii) if applicable, use reasonable best efforts to cause the new Fifth Third preferred stock (or depositary shares representing interests in new Fifth Third preferred stock) to be issued in the direct merger to be approved for listing on the NASDAQ, in each case, subject to official notice of issuance, prior to the effective time of the merger.

Employee Matters. For a period of one year after the closing date of the merger or, if shorter, during the period of employment of a continuing employee of MB Financial (or its subsidiaries) following the closing date of the merger, Fifth Third (or a subsidiary thereof) must provide each continuing employee of MB Financial (or its subsidiaries) with (i) an annual base salary or base wage rate and, cash bonus opportunities and cash incentive opportunities, as applicable, that are no less favorable than the annual base salary or base wage rate and, cash bonus opportunities and cash incentive opportunities, as applicable, provided by MB Financial (or its subsidiaries) to such continuing employee immediately prior to the effective time of the merger, (ii) employee benefits (excluding equity, equity-based compensation, defined benefit pension or retiree welfare benefits) that are, in the aggregate, either (A) substantially comparable to those provided by MB Financial (or its subsidiaries) immediately prior to the effective time of the merger or (B) substantially the same as those that are generally made available to similarly situated employees of Fifth Third and its subsidiaries.

With respect to any employee benefit plans of Fifth Third and its subsidiaries in which continuing employees of MB Financial (or its subsidiaries) become eligible to participate on or after the effective time of the merger (which we refer to as the “new plans”) Fifth Third or another applicable subsidiary will use commercially reasonable efforts to: (i) waive all pre-existing conditions, exclusions and waiting periods with respect to participation and coverage requirements applicable to such employees and their eligible dependents under any new plans, except to the extent such pre-existing conditions, exclusions or waiting periods would apply under the analogous MB Financial benefit plans, (ii) provide each such employee and his or her eligible dependents with credit for any eligible expenses incurred by such employee or dependent prior to the effective time of the merger under a MB Financial benefit plan (to the same extent that such credit was given under the analogous MB Financial benefit plan prior to the effective time of the merger) in satisfying any applicable deductible, co-payment or out-of-pocket requirements under any new plans, and (iii) recognize all service of such employees with MB Financial and its subsidiaries (and their respective predecessors, if applicable) for all purposes in any new plans to the same extent that such service was taken into account under the analogous MB Financial benefit plans prior to the effective time of the merger, provided, that the foregoing service recognition will not apply (x) to the extent it would result in a duplication of benefits for the same period of services, (y) with respect to any new plan that, by its terms, does not recognize prior service for any participants (whether previous employees of Fifth Third or any of its subsidiaries, or continuing employees of MB Financial (or its subsidiaries) or otherwise), or (z) under any retiree health plan, except as otherwise provided in the merger agreement.

During the period commencing at the effective time of the merger and ending on the later of 12-month anniversary of the closing date of the merger, or 90 days after the systems conversion (but in no event later than 24-month anniversary of the closing date of the merger), Fifth Third (or one of its subsidiaries) will provide

 

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severance and outplacement services to continuing employees of MB Financial (or its subsidiaries) (other than continuing employees who are party to a written employment agreement or any other written agreement with MB Financial, Fifth Third or any of their respective subsidiaries providing for severance) that are substantially the same as those that are generally provided to similarly situated employees of Fifth Third and its subsidiaries under the severance plan of Fifth Third and its subsidiaries as of May 20, 2018; provided, that (A) the severance plan of Fifth Third and its subsidiaries, as such plan applies to continuing employees of MB Financial (or its subsidiaries), shall be amended such that (x) the maximum number of weeks of severance provided to the lowest grade classification under such plan shall be 26 weeks, (y) the minimum number of weeks of severance provided to the two highest grade classifications under such plan shall be 26 weeks and (z) the severance provided to continuing employees of MB Financial (or its subsidiaries) whose employment terminates after June 30th shall include a pro rata bonus with respect the calendar year in which termination occurs, (B) such severance and outplacement services shall be subject to the execution (and non-revocation) of a customary release of claims against Fifth Third and each of its subsidiaries and (C) such severance may be paid in lump sum.

In addition, Fifth Third acknowledges and agrees that the closing of the merger will constitute “good reason” (or words of similar import) under the employment or severance agreement covering each executive officer of MB Financial.

Indemnification and Directors’ and Officers’ Insurance. From and after the effective time of the merger, Fifth Third will indemnify and hold harmless, to the fullest extent permitted by applicable law, each present and former director, officer and employee of MB Financial and its subsidiaries or fiduciaries of MB Financial or any of its subsidiaries under any MB Financial employee benefit plan from liabilities incurred in connection with any threatened or actual claim, action, suit, proceeding or investigation, whether arising before or after the effective time of the merger, arising in whole or in part out of, or pertaining to, (i) the fact that such person is or was a director, officer or employee of MB Financial or any of its subsidiaries or (ii) is or was a fiduciary under any of the employee benefit plans, or (iii) is or was serving at the request of MB Financial or any of its subsidiaries as a director or officer of another entity and pertain to matters existing or occurring at or prior to the effective time of the merger, including matters, acts or omissions occurring in connection with the consideration and approval of the merger agreement and the consummation of the transactions contemplated thereby. Fifth Third has agreed to maintain in effect the current policies of directors’ and officers’ liability insurance maintained by MB Financial and its subsidiaries or provide substitute directors’ and officers’ liability insurance for the benefit of present and former officers and directors of MB Financial or any of its subsidiaries with respect to claims against such directors and officers arising from facts or events occurring at or before the effective time of the merger for a period of six years following the effective time of the merger. Any such substitute insurance must contain terms and conditions that are not less advantageous than the current coverage provided by MB Financial, except that Fifth Third is not required to incur annual premium expense greater than 300% of MB Financial’s current annual directors’ and officers’ liability insurance premium. In lieu of the foregoing, MB Financial, in consultation with, and with the consent of, Fifth Third, may obtain a six year “tail” policy at or prior to the effective time of the merger under MB Financial’s existing directors and officers insurance policy on the terms in this paragraph. Fifth Third has agreed to provide similar continuing insurance coverage for fiduciaries under MB Financial benefits plans.

No Solicitation. The merger agreement precludes MB Financial and its subsidiaries and their respective officers, directors, agents, advisors and representatives from initiating, soliciting, knowingly encouraging or knowingly facilitating inquiries or proposals with respect to, or engaging or participating in any negotiations concerning, or providing any confidential or nonpublic information or data in connection with, or having or participating in any discussions with any person relating to, or entering into any binding acquisition agreement, merger agreement or other definitive transaction agreement (other than a confidentiality agreement described in this paragraph) relating to, any Acquisition Proposal (defined below). However, if MB Financial receives an unsolicited bona fide written Acquisition Proposal prior to the approval of the MB Financial stockholder matters and MB Financial’s Board of Directors concludes in good faith (after receiving the advice of its outside counsel and financial advisors) that such Acquisition Proposal constitutes or is more likely than not to result in a Superior

 

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Proposal (defined below), MB Financial may furnish nonpublic information or data and participate in such negotiations or discussions to the extent that the Board of Directors of MB Financial concludes in good faith (after receiving the advice of its outside counsel and financial advisors) that failure to take such actions would more likely than not result in a violation of its fiduciary duties under applicable law, provided that prior to providing any such nonpublic information or data, MB Financial will have provided such information to Fifth Third and entered into a confidentiality agreement with such third party on terms no less favorable to it than the confidentiality agreement between MB Financial and Fifth Third, which confidentiality agreement with such third party will not provide such third party with any exclusive right to negotiate with MB Financial. MB Financial has agreed to, as of the date of the merger agreement, terminate any activities, discussions or negotiations conducted before the date of the merger agreement with any persons other than Fifth Third with respect to any Acquisition Proposal, and to use its reasonable best efforts, subject to applicable law and the fiduciary duties of its Board of Directors, to enforce any existing confidentiality, standstill or similar agreement to which it or its subsidiaries is a party relating to an Acquisition Proposal in accordance with its terms. MB Financial has also agreed to advise Fifth Third within 24 hours following receipt of any Acquisition Proposal, or any inquiry which could reasonably be expected to lead to an Acquisition Proposal, and the substance thereof (including the material terms and conditions of and the identity of the person making such inquiry or Acquisition Proposal), and to keep Fifth Third apprised within 24 hours of any developments, discussions and negotiations, including any amendments to or revisions of the terms of such Acquisition Proposal.

 

   

As used in the merger agreement, “Acquisition Proposal” means (other than the merger) any offer, proposal or inquiry relating to, or any third party indication of interest in, (i) any acquisition or purchase, direct or indirect, of 25% or more of the consolidated assets of MB Financial and its subsidiaries or 25% or more of any class of equity or voting securities of MB Financial or its subsidiaries whose assets, individually or in the aggregate, constitute 25% or more of the consolidated assets of MB Financial, (ii) any tender offer (including a self-tender offer) or exchange offer that, if consummated, would result in such third party beneficially owning 25% or more of any class of equity or voting securities of MB Financial or its subsidiaries whose assets, individually or in the aggregate, constitute 25% or more of the consolidated assets of MB Financial, or (iii) a merger, consolidation, share exchange, business combination, reorganization, recapitalization, liquidation, dissolution or other similar transaction involving MB Financial or its subsidiaries whose assets, individually or in the aggregate, constitute 25% or more of the consolidated assets of MB Financial.

 

   

As used in the merger agreement, “Superior Proposal” means a bona fide written Acquisition Proposal that MB Financial’s Board of Directors concludes in good faith to be more favorable to MB Financial’s stockholders than the merger and the other transactions contemplated by the merger agreement, (i) after receiving the advice of its financial advisors (who must be a nationally recognized investment banking firm), (ii) after taking into account the likelihood of consummation of such transaction on the terms set forth therein and (iii) after taking into account all legal (with the advice of outside counsel), financial (including the financing terms of any such proposal), regulatory and other aspects of such proposal (including any expense reimbursement provisions and conditions to closing) and any other relevant factors permitted under applicable law; provided, that for purposes of the definition of “Superior Proposal,” the references to “25%” in the definition of Acquisition Proposal shall be deemed to be references to “a majority.”

Representations and Warranties

The merger agreement contains representations and warranties made by MB Financial to Fifth Third relating to a number of matters, including the following:

 

   

corporate organization, qualification to do business, good standing, corporate power, and subsidiaries;

 

   

capitalization;

 

   

requisite corporate authority to enter into the merger agreement and to complete the contemplated transactions;

 

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absence of conflicts with governing documents, applicable laws or certain agreements and instruments as a result of entering into the merger agreement or completing the merger;

 

   

required regulatory consents necessary in connection with the merger;

 

   

proper filing of documents with regulatory agencies and the SEC and the accuracy of information contained in the documents filed with the SEC, and Sarbanes-Oxley certifications;

 

   

conformity with U.S. GAAP and SEC requirements of MB Financial’s financial statements filed with the SEC and the absence of undisclosed liabilities;

 

   

accounting and internal controls;

 

   

broker’s and finder’s fees related to the merger;

 

   

absence of a material adverse effect since December 31, 2017;

 

   

legal proceedings and absence of orders, judgments and regulatory restrictions;

 

   

tax matters;

 

   

employee and employee benefits matters;

 

   

compliance with applicable law;

 

   

material contracts

 

   

agreements with regulatory agencies;

 

   

derivatives

 

   

environmental matters;

 

   

investments;

 

   

real property;

 

   

intellectual property;

 

   

related party transactions;

 

   

non-applicability of state takeover laws;

 

   

absence of action or any fact or circumstance that would prevent the merger from qualifying as a reorganization for tax purposes;

 

   

opinion from financial advisor;

 

   

accuracy of information provided by MB Financial in this proxy statement/prospectus;

 

   

loans; and

 

   

insurance.

The merger agreement also contains representations and warranties made by Fifth Third and Intermediary to MB Financial relating to a number of matters, including the following:

 

   

corporate organization, qualification to do business, standing and power, and subsidiaries;

 

   

capitalization;

 

   

requisite corporate authority to enter into the merger agreement and to complete the contemplated transactions;

 

   

absence of conflicts with governing documents, applicable laws or certain agreements as a result of entering into the merger agreement or completing the merger;

 

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required regulatory consents necessary in connection with the merger;

 

   

proper filing of documents with regulatory agencies and the SEC and the accuracy of information contained in the documents filed with the SEC, and Sarbanes-Oxley certifications;

 

   

the conformity with U.S. GAAP and SEC requirements of Fifth Third’s financial statements filed with the SEC and the absence of undisclosed liabilities;

 

   

accounting and internal controls;

 

   

broker’s and finder’s fees related to the merger;

 

   

the absence of a material adverse effect since December 31, 2017;

 

   

legal proceedings;

 

   

tax matters;

 

   

compliance with applicable law;

 

   

material contracts;

 

   

related party transactions;

 

   

absence of action or any fact or circumstance that would prevent the merger from qualifying as a reorganization for tax purposes; and

 

   

accuracy of information provided by Fifth Third in this proxy statement/prospectus.

Certain of these representations and warranties are qualified as to “materiality” or “material adverse effect.” For purposes of the merger agreement, a “material adverse effect” with respect to Fifth Third, MB Financial or Intermediary, as the case may be, means any event, circumstance, development, change or effect, that individually or in the aggregate, (i) has a material adverse effect on the business, properties, assets, liabilities, results of operations or financial condition of such person and its subsidiaries taken as a whole (provided, however, that, with respect to this clause (i), material adverse effect shall not be deemed to include the impact of (A) changes, after the date of the merger agreement, in GAAP or applicable regulatory accounting requirements or official interpretations thereof, (B) changes, after the date of the merger agreement, in laws, rules or regulations of general applicability to companies in the industries in which such person or its subsidiaries operate, or interpretations thereof by courts or governmental entities, (C) changes, after the date of the merger agreement, in global, national or regional political conditions (including the outbreak of war or acts of terrorism) or in economic or market (including equity, credit and debt markets, as well as changes in interest rates) conditions affecting the financial services industry generally and not specifically relating to such person or its subsidiaries, (D) public disclosure of the execution of the merger agreement, public disclosure of consummation of the transactions contemplated by the merger agreement (including any effect on such person’s or its subsidiaries’ relationships with its customers, employees or other persons) or actions expressly required by the merger agreement or actions or omissions that are taken with the prior written consent of or at the written direction of Fifth Third, in the case of MB Financial, or MB Financial, in the case of Fifth Third, (E) a decline in the trading price of such person’s common stock or the failure, in and of itself, to meet earnings projections or internal financial forecasts (it being understood that the underlying cause of such decline or failure may be taken into account in determining whether a material adverse effect on such person has occurred) or (F) in the case of MB Financial, liabilities and other consequences associated with the discontinuance of MB Financial Bank’s national residential mortgage origination business; except, with respect to clauses (A), (B) or (C), to the extent that the effects of such change are disproportionately adverse to the business, properties, assets, liabilities, results of operations or financial condition of such person and its subsidiaries, taken as a whole, as compared to other companies in the industries in which such person and its subsidiaries operate) or (ii) prevents or materially impairs, or would reasonably likely to prevent or materially impair, the ability of such person to timely consummate the transactions contemplated by the merger agreement.

 

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The representations and warranties in the merger agreement do not survive the effective time of the merger and, as described below under “—Termination; Termination Fee,” if the merger agreement is validly terminated, there will be no liability under the representations and warranties of the parties, or otherwise under the merger agreement, unless a party engaged in fraud or willfully breached the merger agreement.

This summary and the copy of the merger agreement attached to this proxy statement/prospectus as Appendix A are included solely to provide investors with information regarding the terms of the merger agreement. They are not intended to provide factual information about the parties or any of their respective subsidiaries or affiliates. The merger agreement contains representations and warranties by Fifth Third and MB Financial, which were made only for purposes of that agreement and as of specific dates. The representations, warranties and covenants in the merger agreement were made solely for the benefit of the parties to the merger agreement, may be subject to limitations agreed upon by the contracting parties, including being qualified by confidential disclosures made for the purposes of allocating contractual risk between the parties to the merger agreement instead of establishing these matters as facts, and may be subject to standards of materiality applicable to the contracting parties that differ from those generally applicable to investors. Investors are not third-party beneficiaries under the merger agreement, and in reviewing the representations, warranties and covenants contained in the merger agreement or any descriptions thereof in this summary, it is important to bear in mind that such representations, warranties and covenants or any descriptions thereof were not intended by the parties to the merger agreement to be characterizations of the actual state of facts or condition of Fifth Third, MB Financial or any of their respective subsidiaries or affiliates. Moreover, information concerning the subject matter of the representations, warranties and covenants may change after the date of the merger agreement, which subsequent information may or may not be fully reflected in Fifth Third’s and MB Financial’s public disclosures. For the foregoing reasons, the representations, warranties and covenants or any descriptions of those provisions should not be read alone and should instead be read in conjunction with the other information contained in the reports, statements and filings that Fifth Third and MB Financial publicly file with the SEC. See “Incorporation of Certain Documents by Reference” beginning on page 133.

Conditions to the Merger

Conditions to Each Party’s Obligations. The respective obligations of each of Fifth Third and MB Financial to complete the merger are subject to the satisfaction of the following conditions:

 

   

receipt of the requisite approval of the MB Financial common stockholders of the merger and charter amendment;

 

   

approval for the listing on the NASDAQ of the Fifth Third common shares to be issued in connection with the merger;

 

   

the effectiveness of the registration statement on Form S-4, of which this proxy statement/prospectus is a part, and the absence of a stop order or proceeding initiated or threatened by the SEC for that purpose;

 

   

the absence of any order, injunction, decree, statute, rule, regulation or other legal restraint or prohibition preventing the consummation of, or which prohibits or makes illegal the consummation of, the transactions contemplated by the merger agreement; and

 

   

the receipt of all required regulatory approvals which are necessary to consummate the transactions contemplated by the merger agreement and the expiration of all statutory waiting periods without the imposition of a materially burdensome regulatory condition.

 

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Conditions to Obligations of Fifth Third and Intermediary. The obligation of Fifth Third and Intermediary to complete the merger is also subject to the satisfaction, or waiver by Fifth Third (on behalf of itself and Intermediary), of the following conditions:

 

   

the accuracy of the representations and warranties of MB Financial as of the date of the merger agreement and as of the closing date of the merger, other than, in most cases, those failures to be true and correct that would not reasonably be likely to have a material adverse effect on MB Financial;

 

   

performance in all material respects by MB Financial of the obligations required to be performed by it at or prior to the closing date of the merger; and

 

   

receipt by Fifth Third of an opinion of Simpson Thacher & Bartlett LLP as to certain tax matters.

Conditions to Obligations of MB Financial. The obligation of MB Financial to complete the merger is also subject to the satisfaction or waiver by MB Financial of the following conditions:

 

   

the accuracy of the representations and warranties of Fifth Third and Intermediary as of the date of the merger agreement and as of the closing date of the merger, other than, in most cases, those failures to be true and correct that would not reasonably be likely to have a material adverse effect on Fifth Third;

 

   

performance in all material respects by Fifth Third and Intermediary of the obligations required to be performed by them at or prior to the closing date of the merger; and

 

   

receipt by MB Financial of an opinion of Silver, Freedman, Taff & Tiernan LLP as to certain tax matters.

Termination; Termination Fee

The merger agreement may be terminated at any time prior to the effective time of the merger, whether before or after approval of the merger by MB Financial’s stockholders:

 

   

by mutual written consent of Fifth Third and MB Financial;

 

   

by either Fifth Third or MB Financial, if a required regulatory approval is denied by final, non-appealable action, or if a governmental entity has issued a final, non-appealable order permanently enjoining or otherwise prohibiting or making illegal the closing of the merger or the bank merger, unless the failure to obtain a required regulatory approval is due to the failure of the party seeking to terminate the merger agreement to perform or observe the covenants and agreements of such party set forth in the agreement;

 

   

by either Fifth Third or MB Financial, if the merger has not closed by May 20, 2019, unless the failure to close by the termination date is due to the failure of the party seeking to terminate the merger agreement to perform or observe the covenants and agreements of such party set forth in the agreement, provided that if on the termination date all closing conditions are satisfied or capable of being satisfied other than the receipt of all required regulatory approvals, then the termination date may be extended for three months at the option of either Fifth Third or MB Financial;

 

   

by either Fifth Third or MB Financial, if there is a breach by the other party that would, individually or in the aggregate with other breaches by such party, result in the failure of a closing condition, unless the breach (if curable) is cured by the earlier of May 20, 2019 and 45 days following written notice of the breach (provided that the terminating party is not then in material breach of the merger agreement); or

 

   

by Fifth Third, if, (i) prior to the approval of the MB Financial stockholder matters, the MB Financial Board of Directors (A) submits the MB Financial stockholder matters to its stockholders without a recommendation for approval, or otherwise withdraws or materially and adversely modifies its recommendation for approval (or publicly discloses an intention to do so), or recommends to its

 

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stockholders an Acquisition Proposal other than the merger, or (B) materially breaches its obligation to call a stockholder meeting and recommend to its stockholders, in accordance with the terms of the merger agreement, the approval of the MB Financial stockholder matters or to refrain from soliciting alternative acquisition proposals or (ii) a tender offer or exchange offer for 25% or more of MB Financial’s outstanding shares of common stock is commenced (other than by Fifth Third or its subsidiaries) and the MB Financial Board of Directors recommends that MB Financial’s stockholders tender or exchange their shares (or fails to recommend a rejection of such tender or exchange offer within ten business days).

MB Financial must pay Fifth Third a termination fee of $151.2 million in the following circumstances:

 

(1)

prior to the effective time of the merger and after the date of the merger agreement, a bona fide Acquisition Proposal has been made known to senior management or the Board of Directors of MB Financial or made directly to its stockholders generally or any person has publicly announced (whether or not withdrawn) an Acquisition Proposal with respect to MB Financial and (A) thereafter the merger agreement is terminated by either party because the merger was not consummated on or before May 20, 2019 and MB Financial stockholders did not approve the MB Financial stockholder matters or (B) thereafter the merger agreement is terminated by Fifth Third because MB Financial has breached the merger agreement in such a way as would prevent certain closing conditions from being obtained and would give Fifth Third the right to terminate the merger agreement and (C) within one year after the termination of the merger agreement, an Acquisition Proposal is consummated or any definitive agreement with respect to an Acquisition Proposal is entered into (provided that for purposes of the foregoing, the term “Acquisition Proposal” shall have the meaning assigned to such term elsewhere in this proxy statement/prospectus, except that the references to “25%” in the definition of an “Acquisition Proposal” elsewhere in this proxy statement/prospectus shall be deemed to be references to “50%”); or

 

(2)

Fifth Third terminates the merger agreement because (i) prior to the approval of the MB Financial stockholder matters, the MB Financial Board of Directors (A) submits the MB Financial stockholder matters to its stockholders without a recommendation for approval, or otherwise withdraws or materially and adversely modifies its recommendation for approval (or publicly discloses an intention to do so), or recommends to its stockholders an Acquisition Proposal other than the merger, or (B) materially breaches its obligation to call a stockholder meeting and recommend to its stockholders, in accordance with the terms of the merger agreement, the approval of the MB Financial stockholder matters or to refrain from soliciting alternative acquisition proposals or (ii) a tender offer or exchange offer for 25% or more of MB Financial’s outstanding shares of common stock is commenced (other than by Fifth Third or its subsidiaries) and the MB Financial Board of Directors recommends that MB Financial’s stockholders tender or exchange their shares (or fails to recommend a rejection of such tender or exchange offer within ten business days).

Effect of Termination

If the merger agreement is validly terminated, it will become void without any liability on the part of any of the parties unless a party fraudulently or willfully breaches the merger agreement. However, the provisions of the merger agreement relating to confidentiality obligations of the parties, the termination fee and certain other technical provisions will continue in effect notwithstanding termination of the merger agreement.

Amendments, Extensions and Waivers

The merger agreement may be amended by the parties, by action taken or authorized by their respective Boards of Directors, at any time before or after approval of the matters presented in connection with the merger by the stockholders of MB Financial, in writing signed on behalf of each of the parties, provided that after any approval of the transactions contemplated by the merger agreement by the MB Financial stockholders, there may not be, without further approval of such stockholders, any amendment of the merger agreement that requires further approval under applicable law.

 

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At any time prior to the effective time of the merger, the parties, by action taken or authorized by their respective Boards of Directors, may (a) extend the time for the performance of any of the obligations or other acts of the other party, (b) waive any inaccuracies in the representations and warranties contained in the merger agreement or any document delivered pursuant thereto and (c) waive compliance with any of the agreements or conditions contained in the merger agreement, provided that after any approval of the merger by the MB Financial stockholders, there may not be, without further approval of such stockholders, any extension or waiver of the merger agreement or any portion thereof that requires further approval under applicable law. Any agreement on the part of a party to any extension or waiver must be in writing.

Stock Market Listing

Application will be made by Fifth Third to have the Fifth Third common shares to be issued in connection with the merger approved for listing on the NASDAQ, which is the principal trading market for existing shares of Fifth Third common shares. If applicable, Fifth Third will use its reasonable best efforts to have the new Fifth Third preferred stock to be issued in the direct merger (or depositary shares representing interests in the new Fifth Third preferred stock) approved for listing on the NASDAQ. It is a condition to both parties’ obligation to complete the merger that approval for listing of shares of Fifth Third common stock is obtained, subject to official notice of issuance. As promptly as reasonably practicable following the effective time of the merger, MB Financial common stock and the depositary shares representing interests in MB Financial preferred stock will be delisted from the NASDAQ and deregistered under the Exchange Act.