UBS Bypasses Shareholder Vote, Will Acquire Credit Suisse for Over $2 Billion

UBS has finally agreed to acquire troubled Credit Suisse (NYSE: CS) for over $2 billion, following emergency meetings with regulators and the Swiss National Bank that resulted in Swiss authorities agreeing to rewrite governance laws otherwise requiring a crucial shareholder vote.

As first reported by the Financial Times, UBS has reached a deal to buy Credit Suisse for just over $2 billion, substantially below the distraught bank’s closing price of 1.86 Swiss francs on Friday. The Swiss investment bank will now pay just over 0.50 Swiss francs of its own stock— up from a previously rejected offer of 0.25 Swiss francs.

In the meantime, the central bank has agreed to forego a material adverse change clause that would cancel the deal if credit default swaps increase, as well as earmark a $100 billion credit line to UBS. In order for the deal to pass on such short notice, regulators also had to sidestep routine corporate governance rules in order to halt a UBS shareholder vote, that would otherwise take up to six weeks.

However, the fast-tracked plans are receiving criticism by pension fund representatives over regulators’ abrupt and myopic decision making. “I can’t believe our members and UBS shareholders will be happy about this,” Ethos Foundation CEO Vincent Kaufmann told the Financial Times. “I have never seen such measures taken; it shows how bad the situation is.” 

Information for this briefing was found via the Financial Times and the sources mentioned. 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.

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