11 days ago 2 min read

UBS Makes A $1 Billion Buyout Offer To Credit Suisse (CS), But There's A Catch


According to the Financial Times, troubled private bank UBS Group AG in Switzerland has made a purchase bid to ailing Credit Suisse Group AG. Previously, it has been confirmed that there will be merger between Credit Suisse and UBS. But, UBS has insisted on an all-share merger with a major adverse change, and it remains to be seen whether Credit Suisse will accept this offer or not.

Troubled Credit Suisse Group AG Is Offered $1B By UBS Group AG

Bankers believe that a merger between Credit Suisse and UBS, the largest private bank in the world, is the only option to save Credit Suisse and its clients. Concerns about a bank run caused the share price of Credit Suisse to drop by more than 30% in the previous month. Credit Suisse shares were currently trading at $2.01 at the time of publishing.

Silicon Valley Bank (NASDAQ: SIVB) and First Republic (FRC), two US-based banks, have already failed, therefore the US Federal Reserve chose against saving the banks instead of the consumers. Recently, SVB submitted a chapter 11 bankruptcy petition.

Is Credit Suisse Going To Accept UBS' Offer?

Although UBS has made an offer, we have not yet heard from Credit Suisse executives. The terms of the transaction include that UBS will buy Credit Suisse for a price of 0.25 Francs per share in UBS stock. according to a Bloomberg quote.

"As per the offer UBS has insisted on a material adverse change that provides UBS authority to walk out of deal anytime if its credit defaults spreads jump by 100 basis points or more."

Also, it should be highlighted that Switzerland regulators are approving this sale without the shareholders' approval because it is an all-shares transaction. This merger is thought to be the last ditch attempt to save the markets after the collapse of Credit Suisse. Officials at Credit Suisse have not yet released a statement, but we might do so before the markets open on Monday.

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