The possible standing takeover of Credit Suisse by UBS is getting closer. According to a Financial Times (FT) report, UBS is offering “up to” US$1 billion for its smaller rival.
The deal is expected to be wrapped up this evening – but major CS shareholders would have to go along.
And there is now a new (further) alternative.
Switzerland is considering the partial or complete nationalization of Credit Suisse.
As the news agency Bloomberg reports, this step is currently the only alternative to a takeover by UBS.
That’s because the US$1 billion price tag would be a stark discount: the purchase values Credit Suisse at about US$7 billion less than its market value at Friday’s close.
According to the FT, UBS had offered a price of 0.25 Swiss francs (US$0.27) per share, to be paid in UBS shares.
Credit Suisse shares closed Friday at 1.86 Swiss francs.
Because the situation is changing rapidly, there is no guarantee that the terms will remain unchanged or that an agreement will be reached, the report added.
To that end, Swiss authorities plan to change laws to bypass a shareholder vote for the transaction.
This is to guarantee that the transaction will be completed by Monday, the FT further wrote.
The offer was not well received by Credit Suisse: Bloomberg reported, citing circles, that the bank, with the backing of its largest shareholders, is said to have rejected UBS’s terms, however.
Credit Suisse shares last week posted its steepest decline since the outbreak of the coronavirus pandemic – despite the announcement that the company would receive a loan of up to 50 billion Swiss francs ($54 billion) from the Swiss central bank.
Credit Suisse has struggled with losses and scandals in the past. Last week, the sentiment was further shaken by the collapse of Silicon Valley Bank and the closure of Signature Bank in the U.S., sending shares sliding.
A takeover of the badly troubled Credit Suisse would probably be the best solution – it would be essential for the bank, the industry, and the entire financial system to have a viable solution by Monday morning.
Then the markets, which have also been stumbling recently, could return to calmer waters.