BREAKING: UBS offers to buy Credit Suisse for up to $1bn
https://www.ft.com/content/ec4be743-052a-4381-a92…UBS has offered to buy Credit Suisse for up to $1bn, with Swiss authorities planning to change the country's laws to bypass a shareholder vote on the transaction as they rush to finalise a deal before Monday.The all-share deal between Switzerland's two biggest banks is set to be signed as soon as Sunday evening and will be priced at a fraction of Credit Suisse's closing price on Friday, all but wiping out the target's shareholders, four people with direct knowledge of the situation said.The offer was communicated on Sunday morning with a price of SFr0.25 a share to be paid in UBS stock, far below Credit Suisse's closing price of SFr1.86 on Friday, the people said. UBS has also insisted on a material adverse change that voids the deal if its credit default spreads jump by 100 basis points or more, they added.The situation is fast-moving and there is no guarantee that terms will remain the same or that a deal will be reached, all the people stressed.Some of the people said that the current terms were unfair for Credit Suisse and its shareholders. Others criticised the plans to void normal corporate governance rules by preventing a UBS shareholder vote.There has been limited contact between the two lenders and the terms have been heavily influenced by the Swiss National Bank and regulator Finma, the people said. The US Federal Reserve has given its assent to the deal progressing, they added.While the current terms value Credit Suisse's equity at up to $1bn, the figure does not reflect additional provisions the Swiss National Bank will make to ensure the deal is done.Both sides have been locked in discussions with regulators since Wednesday, when Credit Suisse asked the SNB to provide it with an emergency SFr50bn ($54bn) credit line.When this backstop failed to arrest a fall in its share price and stop panicked clients from withdrawing their money, the central bank stepped in to force a merger after becoming concerned about the viability of the country's second-largest lender.Deposit outflows from Credit Suisse topped SFr10bn a day late last week, the Financial Times has reported. Customers withdrew SFr111bn from the group in the final three months of last yearOn Saturday night, the Swiss cabinet assembled in the finance ministry in Bern for a series of presentations from government officials, the SNB, market regulator Finma, and representatives of the banking sector.The government is preparing emergency measures to fast-track the takeover and plans to introduce legislation that will bypass the normal six-week consultation period required for UBS shareholders so the deal can be sealed immediately, the people said.The framework of the deal has been designed by Swiss regulators to provide maximum stability to the country's banking system, people briefed about the matter said. Swiss authorities have already secured preapproval from relevant regulators in the US and Europe which are expected to issue co-ordinated statements today.UBS will dramatically shrink Credit Suisse's investment bank, so that the combined entity will make up no more than a third of the merged group, two of the people said.However, the current term sheet for the deal does not specify what will happen to Credit Suisse's individual business divisions, and simply outlines a 100 per cent takeover of the group.Negotiators have given Credit Suisse the code name Cedar and UBS is referred to as Ulmus, according to people briefed on the matter.UBS is seeking concessions and protections from the government, particularly from any pending legal cases and regulatory investigations into Credit Suisse that could result in fines or losses, the FT has reported. However, it is unlikely it will get indemnity from any losses on assets, one of the people involved said.UBS also wants to be allowed to phase in any extra demands it would face under global rules on capital that govern the world's biggest banks.The SNB, UBS, Credit Suisse and Finma declined to comment.
Comments (22)
Rip to senior bankers with cs stock
1bn sounds like a steal
The book value of CS was like CHF 45bn at the end of 2022. Selling for only CHF 1bn is a steep price to pay (in the form of lost value) for maintaining continuity of operations vs. just liquidating the assets.
Who was responsible for structuring this deal? Material adverse clause tied to CDS spreads jumping 100bps. Arb funds are going to have a field day with that at the open tomorrow. How does this actually get done with that MAC in there?
UBS acted as Exclusive FA
My guess is UBS Is doing all it can to stop this deal from getting done. Question is what happens if they can't reach an agreement by Monday? CS run and fire stock sale no doubt-they will be worth a lot less than a billion…
According to FT, they aim to close today as well, so the MAC clause wouldn't really apply if they could close shortly after signing.
https://twitter.com/davidfaber/status/1637498962306379778?s=46&t=gO2DbIfQudX2JuecSVpwRg
Looks like it was removed
"UBS will dramatically shrink Credit Suisse's investment bank, so that the combined entity will make up no more than a third of the merged group, two of the people said."
Literally once source has said that, nothing is finalized boys keep your wigs on. Other sources saying that the CS IB could be wound down and sold off.
Is the situation for CS so shitty that only ubs can pay 1 billion for it? Why can't the other BB compete on this deal
Speculating because the Swiss government & SNB are the ones strong arming the deal
If that's the case, makes me wonder the valuation of all these Silicon Valley unicorn start ups made of paper money. We are talking CS for 1 billion here, that's a steal. Much rather own CS than one of those internet tech start up
Swiss government are bending all the regulations so UBS can buy it
Wonder if UBS is allowed to sell off parts of the business post-close or if SNB is asking them to keep whole. Some of the stronger CS divisions are likely worth a lot more than $1B as standalone entities
Was wondering that as well - wouldn't CSFB be worth over 1 billion as well? As opposed to entirely scraping it
Yep, and the AM business has value too. Clearly there's some very ugly stuff inside CS with deeply negative EV if the combined entity is worth this little... interesting to watch for sure
Cs has to take th deal. If they refuse and deal dies stock price collapses Monday morning to around this offer price as shareholders get spooked knowing this is the relative "valuation" of their shares in a merger.
Like it or not, they have to do this deal. Smart for ubs to leak the details.
Apparently swiss debating nationalizing CS now too
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