UBS to buy rival Credit Suisse in a deal worth over $3.2 billion

UBS confirmed on Sunday that it agreed to take over embattled Credit Suisse (CS) in a deal valued at CHF3 billion ($3.24B). This is despite Credit Suisse being valued at about $8B based on Friday’s close.

Under the terms of the deal, Credit Suisse shareholders will receive 1 UBS share for every 22.48 Credit Suisse shares held.

“With the takeover of Credit Suisse by UBS, a solution has been found to secure financial stability and protect the Swiss economy in this exceptional situation,” the Swiss National Bank (SNB) said in a press release.

The deal involving the two biggest Swiss banks was facilitated by the national government, which said it plans to provide over $9B to backstop some losses that UBS may incur by taking over its smaller rival.

Moreover, the SNB will inject over $100B of liquidity to help facilitate the deal.

“This acquisition is attractive for UBS shareholders but, let us be clear, as far as Credit Suisse is concerned, this is an emergency rescue. We have structured a transaction which will preserve the value left in the business while limiting our downside exposure,” UBS Chairman Colm Kelleher said in a press release on Sunday.

After the transaction is completed, UBS will have over $5 trillion in assets under management (AUM).

“Bringing UBS and Credit Suisse together will build on UBS’s strengths and further enhance our ability to serve our clients globally and deepen our best-in-class capabilities,” UBS Chief Executive Officer Ralph Hamers said.

Swiss authorities were racing to secure a deal before Asian markets opened. The Financial Times first reported on the deal.

By Senad Karaahmetovic