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UBS Group AG (UBS) confirmed on Sunday evening that it is acquiring Credit Suisse for a total of 3 billion Swiss francs or about $3.24 billion in an all-stock deal. The deal was facilitated by the Swiss government and international regulators to ensure the stability of the Swiss banking system. The offer is a fraction of Credit Suisse’s market cap of almost $8 billion last Friday. The stock, which had dropped from $8 a year ago to just above $2 is likely to drop sharply into penny stock territory when the market opens on Monday.
The deal was announced a week after the collapse of two large U.S. banks. We have been covering the turmoil in the last two editions of our weekly Friday Wrap articles: FDIC Takes Control of Silicon Valley Bank and Rescuing First Republic Bank.
Swiss President Alain Berset said the deal is “one of great breadth for the stability of international finance“. “An uncontrolled collapse of Credit Suisse would lead to incalculable consequences for the country and the international financial system.” The deal has been welcomed by The Federal Reserve and the Treasury Department in the United States.
Credit Suisse’s shares dropped more than 24% last week, in the midst of a series of scandals that led to a decline in client and investor confidence. Having struggled with multiple scandals, the company’s ADSs have dropped 89% in the past five years.
According to Bloomberg: UBS Group AG’s government-brokered deal to buy Credit Suisse Group AG is historic, complex and unique.