UBS Proposes to Acquire Credit Suisse for $1 Billion

03/19/2023 11:47 • Metaverse Matters • 85 views

According to reports, according to the Financial Times, UBS has proposed to acquire Credit Suisse for up to $1 billion. The Swiss authorities are planning to amend the country’s laws to bypass shareholder votes on the deal, as they are eager to finalize the deal by Monday. Four people familiar with the matter said that an all stock transaction between Switzerland’s two largest banks would be signed as early as Sunday night, and the transaction price would be only a small portion of Credit Suisse’s closing price on Friday, which would almost cost Credit Suisse’s shareholders nothing. People familiar with the matter said that on Sunday morning, the two sides had a communication on the acquisition offer. UBS proposed to purchase the shares of Credit Suisse at a price of 0.25 Swiss francs per share, which was far lower than the closing price of 1.86 Swiss francs last Friday. People familiar with the matter added that UBS also insisted on setting significant adverse change clauses, which would invalidate the transaction if its credit default spread jumped by 100 basis points or more. Everyone emphasized that the situation is changing rapidly, and there can be no guarantee that the terms will remain unchanged or that an agreement can be reached. People familiar with the matter said that the current terms are unfair to Credit Suisse and its shareholders. The Swiss Central Bank, UBS, Credit Suisse and Finma all declined to comment.

UBS plans to acquire Credit Suisse for up to $1 billion

Analysis based on this information:

According to reports, UBS has made an offer to acquire Credit Suisse for up to $1 billion through an all-stock transaction. The Swiss authorities are said to be planning to amend the country’s laws to bypass shareholder votes on the deal, aiming to finalize the acquisition by Monday. However, the proposed transaction price is much lower than Credit Suisse’s closing price on Friday, raising concerns over the fairness of the terms for the target company and its shareholders.

On Sunday morning, the two sides communicated on the acquisition offer, with UBS proposing to purchase Credit Suisse’s shares at a price of 0.25 Swiss francs per share, significantly lower than the closing price of 1.86 Swiss francs. Moreover, UBS insisted on setting significant adverse change clauses, which would invalidate the transaction if its credit default spread increased by 100 basis points or more. This condition implies that UBS may be concerned about the credit risk and potential losses associated with Credit Suisse’s assets and liabilities.

The Swiss Central Bank, UBS, Credit Suisse, and Finma all declined to comment on the matter, indicating that the situation may still be fluid and subject to negotiation. Nonetheless, the proposed acquisition has generated significant attention from the financial community, given the potential impact on the Swiss banking sector, which comprises a significant portion of the country’s economy.

The proposal raised questions about the motives and strategy behind UBS’s move, as well as the potential consequences for Credit Suisse’s shareholders. Some observers suggested that UBS could be seeking to consolidate its position as the dominant player in the Swiss financial market, while others speculated that it may be a tactical move aimed at exploiting Credit Suisse’s recent woes, such as regulatory fines and trading losses.

In conclusion, the UBS proposal to acquire Credit Suisse for $1 billion through an all-stock transaction has generated significant interest and concerns among various stakeholders in the financial industry. The low transaction price and adverse change clauses proposed by UBS have raised questions about the fairness and potential risks of the deal. The outcome of the negotiations and the impact on the Swiss banking sector remain uncertain.

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UBS Proposes to Acquire Credit Suisse for $1 Billion

UBS plans to acquire Credit Suisse for up to $1 billion

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