UBS has agreed to buy Credit Suisse after increasing its offer to more than $2 billion in the government-brokered all-share deal, a report said on Sunday.
UBS will pay more than 0.50 francs ($0.5401) a share in its own stock, far below Credit Suisse’s closing price of 1.86 francs on Friday (73% discount, to be precise), Financial Times reported, citing sources.
The Swiss National Bank has offered UBS Group AG around $100 billion in liquidity to help it take on the operations of Credit Suisse Group AG as part of the deal, the FT added, citing two people familiar with the matter.
ALSO READ: Swiss authorities weigh nationalising Credit Suisse amid takeover talks with UBS
According to the report, UBS has agreed to a softening of a material adverse change clause that would void the deal if its credit default spreads jump. Swiss authorities are expected to change country’s law to bypass UBS shareholder vote, the report said.
The 167-year-old Credit Suisse is the biggest name ensnared in the turmoil unleashed by the collapse of U.S. lenders Silicon Valley Bank and Signature Bank over the past week, spurring a rout in banking stocks and prompting authorities to rush out extraordinary measures to keep banks afloat.
Credit Suisse shares lost a quarter of their value in the last week. It was forced to tap $54 billion in central bank funding as it tries to recover from a string of scandals that have undermined the confidence of investors and clients.
The company ranks among the world's largest wealth managers and is considered one of 30 global, systemically important banks whose failure would ripple throughout the entire financial system.
UBS had earlier tabled an offer of about $1 billion, or 0.25 francs a share for Credit Suisse, which the firm had pushed back on.
While Credit Suisse avoided a bailout during the financial crisis, it has been hammered over recent years by a series of blowups, scandals, leadership changes and legal issues. Clients had pulled more than $100 billion of assets in the last three months of last year as concerns mounted about its financial health, and the outflows continued even after it tapped shareholders in a 4 billion-franc capital raise
With inputs from Reuters