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.

 

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.

 
Most Helpful

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.

 

Voluptatem incidunt est consequatur error non minima in. Culpa aut aut iure voluptatem. Eius ut labore quo. Facilis sint aperiam eius cum. Veniam sed nisi maiores exercitationem ut.

Porro hic id expedita odio. Aut molestias et veniam in porro. Consequuntur dolorem est illum nihil. Voluptates inventore possimus qui deserunt qui eum nam voluptatibus. Nihil assumenda maxime rem omnis quis neque. Omnis consequatur accusamus et aut aperiam.

Maiores fugit aut eum debitis in. Minima et iure unde autem expedita repellat. Ullam alias sunt eaque assumenda sit est. Ducimus ad facere amet recusandae ut aliquam voluptatem.

Sed pariatur ut quia voluptatem sapiente doloremque. Distinctio nostrum libero voluptates quaerat maiores vitae consequatur.

Career Advancement Opportunities

April 2024 Investment Banking

  • Jefferies & Company 02 99.4%
  • Goldman Sachs 19 98.8%
  • Harris Williams & Co. New 98.3%
  • Lazard Freres 02 97.7%
  • JPMorgan Chase 03 97.1%

Overall Employee Satisfaction

April 2024 Investment Banking

  • Harris Williams & Co. 18 99.4%
  • JPMorgan Chase 10 98.8%
  • Lazard Freres 05 98.3%
  • Morgan Stanley 07 97.7%
  • William Blair 03 97.1%

Professional Growth Opportunities

April 2024 Investment Banking

  • Lazard Freres 01 99.4%
  • Jefferies & Company 02 98.8%
  • Goldman Sachs 17 98.3%
  • Moelis & Company 07 97.7%
  • JPMorgan Chase 05 97.1%

Total Avg Compensation

April 2024 Investment Banking

  • Director/MD (5) $648
  • Vice President (19) $385
  • Associates (86) $261
  • 3rd+ Year Analyst (14) $181
  • Intern/Summer Associate (33) $170
  • 2nd Year Analyst (66) $168
  • 1st Year Analyst (205) $159
  • Intern/Summer Analyst (145) $101
notes
16 IB Interviews Notes

“... there’s no excuse to not take advantage of the resources out there available to you. Best value for your $ are the...”

Leaderboard

1
redever's picture
redever
99.2
2
Secyh62's picture
Secyh62
99.0
3
Betsy Massar's picture
Betsy Massar
99.0
4
BankonBanking's picture
BankonBanking
99.0
5
CompBanker's picture
CompBanker
98.9
6
dosk17's picture
dosk17
98.9
7
kanon's picture
kanon
98.9
8
GameTheory's picture
GameTheory
98.9
9
bolo up's picture
bolo up
98.8
10
Linda Abraham's picture
Linda Abraham
98.8
success
From 10 rejections to 1 dream investment banking internship

“... I believe it was the single biggest reason why I ended up with an offer...”