- The SVB has recently initiated a chapter 11 bankruptcy.
- The sale involves 100% of the outstanding shares.
UBS Group AG, a private Swiss bank, has reportedly made a bid to acquire the financially troubled Credit Suisse Group AG. There have been reports recently of a confirmed merger between Credit Suisse and UBS.
Credit Suisse, the country’s second-largest private lender, has been struck hard by the financial crisis. Now, UBS Group AG has made an offer to purchase the company for as much as $1 billion. Credit Suisse’s acceptance of UBS’s offer, contingent on its major adverse change all-shares clause, remains to be seen.
Bankers believe a merger between Credit Suisse and UBS is the only option to preserve Credit Suisse and its clients since UBS is the biggest private bank in the world. Concerns of a bank run caused Credit Suisse shares to drop by more than 30 percent in the last month.
Offer Too Low
There have already been two major bank failures in the United States, and the Federal Reserve has opted not to bail out the banks but to rescue the consumers. The SVB has recently initiated a chapter 11 bankruptcy. The terms of the agreement calls for UBS to acquire Credit Suisse in exchange for 0.25 Francs per share of UBS shares.
According to persons familiar with the situation, Credit Suisse, which had a market value of around $7.4 billion francs ($8 billion) as of Friday’s close, thinks the offer is too low and will affect shareholders and staff who have deferred shares.
It’s important to remember that the sale involves 100% of the outstanding shares and that Swiss authorities are skipping a shareholder vote in order to finalize it. The collapse of Credit Suisse has been seen as a severe blow to international financial markets, making this merger seem like a last resort. The decision may be announced by Credit Suisse authorities before Monday’s market opening.