Swiss banking giant UBS has offered to acquire its rival Credit Suisse in a deal worth approximately $1 billion. The Swiss government is set to announce the deal shortly, and hopes to complete the merger before Asian markets open Monday morning.
According to the Financial Times, UBS would pay $0.27 (or 0.25 Swiss Francs) per share in stock, compared to Credit Suisse’s $2.01 share price when markets closed on Friday. Credit Suisse has reportedly pushed back on the deal, citing the offer as too low, and there is no guarantee that a deal will be reached.
The Swiss government is also planning to waive the six-week-long waiting period normally required before a merger, and is set to change laws to not require a shareholder vote to quicken the deal. UBS has stipulated that a 100-basis-point drop in its credit default spreads would represent a material adverse change that would void the deal.
The current situation is a result of the collapse of two major U.S. banks last week, as well as Credit Suisse's own financial issues. Just this week, the Saudi National Bank said it wouldn't buy any more shares in Credit Suisse, and the bank reported "material weakness" in its 2021 and 2022 financial reporting processes.
Ultimately, the situation is uncertain, but the Swiss government is looking to move quickly to contain the crisis and protect its banks. Whether UBS will be able to acquire Credit Suisse for the reported amount of $1 billion remains to be seen.