UBS is said to have officially offered to buy troubled bank Credit Suisse for a figure of up to $1.0 billion, following rumors yesterday that the Swiss government would be changing laws to bypass required shareholder votes.
The acquisition, if approved by Credit Suisse’s board, would take the form of an all-share transaction between the two biggest banks in Switzerland. At a price of $1.0 billion however, it would represent roughly an 86% loss for shareholders of the bank, based on Friday’s closing price.
The offer price is said to have amounted to just SFR0.25 a share, versus the closing price of SFR1.86, as per the Financial Times. A clause in the transaction would also see the acquisition kyboshed if UBS’ credit default spreads jumped by 100 or more basis points as a result of the transaction.
At the same time, the banks are said to have had minimal contact, with the deal having been “heavily influenced” by the Swiss National Bank and Finma, with the US Federal Reserve also being involved to some degree. The intent is largely to bring stability to Switzerland’s banking system. As part of that, UBS also wants protections from the government related to any pending legal cases and investigations against Credit Suisse.
Bloomberg however is reporting that Credit Suisse is pushing back on the deal because it is “too low and would hurt shareholders and employees who have deferred stock.”
Information for this briefing was found via the Financial Times. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
