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UBS to Acquire Credit Suisse in a Billion-Dollar Deal

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UBS to Acquire Credit Suisse in a Billion-Dollar Deal

According to reports from the Financial Times, people familiar with the matter said UBS had agreed to acquire Credit Suisse and raised its bid to more than $2 billion. UBS will purchase the shares of Credit Suisse at a price of more than 0.5 Swiss francs per share, which is still far below the closing price of 1.86 Swiss francs last Friday. In addition, UBS has agreed to soften the “material adverse change” clause, which stipulates that if UBS’s credit default spreads soar, the transaction will lapse. The material adverse change clause will apply between the signing and completion of the transaction. People familiar with the matter also said that the Swiss authorities have obtained the prior approval of relevant regulatory bodies in the United States and Europe, and it is expected that the United States and Europe will issue a joint statement today. Two people familiar with the matter said UBS would significantly shrink Credit Suisse’s investment banking business, with the combined investment banking business accounting for no more than one-third of the combined group. It is reported that during this negotiation, the negotiators gave the code name Cedar to Credit Suisse and Ulmus to UBS.

People familiar with the matter: UBS is understood to have agreed to acquire Credit Suisse for over US $2 billion

Analysis based on this information:


UBS has reportedly agreed to acquire Credit Suisse at a price of more than $2 billion, according to sources familiar with the matter. However, the price is still much lower than the closing price last Friday, as UBS plans to significantly shrink Credit Suisse’s investment banking business. The deal also involves a softening of the “material adverse change” clause, which stipulates that if UBS’s credit default spreads soar, the transaction will lapse. The regulatory bodies in the United States and Europe have given their prior approval to the deal, with a joint statement expected to be issued today.

The acquisition of Credit Suisse by UBS is expected to have a significant impact on the investment banking industry, as the combined investment banking business will account for no more than one-third of the combined group. This suggests that UBS is intending to focus more on traditional banking services, rather than continuing with the investment banking model pursued by Credit Suisse. The deal is also likely to result in job losses and restructuring at Credit Suisse, as UBS seeks to streamline the business and reduce costs.

The softening of the “material adverse change” clause is significant, as it reduces the risk of the deal falling through if UBS encounters difficulties with its credit default spreads. This indicates that UBS is confident in its ability to manage its credit risks and expects the acquisition to be beneficial in the long run.

The approval of the regulatory bodies in the United States and Europe is also an important milestone in the deal, as it ensures that UBS has met the necessary legal and regulatory requirements. This will provide reassurance to investors and other stakeholders that the acquisition is being conducted in a transparent and responsible manner.

In conclusion, the acquisition of Credit Suisse by UBS is a significant development in the investment banking industry, with implications for both banks and their stakeholders. While the deal is likely to result in job losses and restructuring at Credit Suisse, it is expected to benefit UBS in the long run by allowing it to focus more on traditional banking services. The softening of the “material adverse change” clause and the approval of the regulatory bodies in the United States and Europe are positive signs for the success of the acquisition.

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