UBS Group AG is offering to buy Credit Suisse Group AG for up to $1 billion, a deal the embattled Swiss company is rejecting with the backing of its largest shareholder.
Credit Suisse, which ended Friday with a market value of about 7.4 billion francs ($8 billion), believes the offer is too low and would hurt shareholders and employees who hold deferred shares, according to people with knowledge of the matter.
UBS’s offer was announced on Sunday with a price of 0.25 francs per share to be paid in shares. UBS also insisted on a material adverse change that voids the deal if its credit default spreads rise 100 basis points or more, the Financial Times reported. Credit Suisse closed down 8 percent at 1.86 francs at Friday’s close.
Swiss authorities are trying to broker a deal to address a loss at Credit Suisse that has shocked the global financial system over the past week as panicked investors dumped their stocks and bonds following the collapse of several smaller US lenders.
related stories
US Bank Collapse: RBI Governor Stresses Prudent Asset-Liability Management
Indian financial sector stable, worst of inflation behind us, says Shaktikanta Das
A liquidity boost from the Swiss central bank briefly halted declines, but the market drama carries the risk that clients or counterparties will continue to flee, with potential ramifications for the broader industry.
Complex discussions over what would be the first combination of two global systemically important banks since the financial crisis have seen Swiss and US authorities intervene, according to people with knowledge of the matter.
Talks accelerated on Saturday, with all parties pushing for a solution that can be executed quickly after a week in which clients withdrew money and counterparties backed out of some deals with Credit Suisse.
Also read: Indian banks hold out to absorb potential liquidity impact of Credit Suisse stress
