UBS Group AG (NYSE:UBS) has offered to buy Credit Suisse Group AG (NYSE:CS) for up to $1 billion, according to the Financial Times.
Sources told the publication that UBS' offer was communicated on Sunday morning with a price of 0.25 francs a share to be paid in UBS stock. The deal would be priced at a fraction of Credit Suisse's closing price on Friday.
Credit Suisse, however, believes the offer is too low and would hurt shareholders and employees who have deferred stock, Bloomberg reported, citing people familiar with the matter.
UBS has also reportedly insisted on a material adverse change that would void the deal if its credit default spreads jump by 100 basis points or more.
The Financial Times reported that there has been limited contact between the two banks and that the terms have been heavily influenced by the Swiss National Bank and regulator Finma. Because the situation has been moving very quickly, there's also no guarantee a deal will be reached or that the terms will remain the same.
Pending approval of the offer, the Swiss government would reportedly change the country's laws to bypass a shareholder vote on the transaction. Under this scenario, the government would take emergency measures to allow the takeover to proceed and introduce legislation that would skip the usual six-week consultation period required for UBS shareholders.
The proposed all-share deal between the two banks could be signed as soon as Sunday evening.
UBS has a market value of $56.6 billion. Shares in Credit Suisse, on the other hand, closed on Friday with a value of $8 billion.
Earlier, Bloomberg reported that UBS executives had opposed an arranged combination with Credit Suisse because they wanted to focus on UBS' wealth-centric strategy. In addition, they were reluctant to take on risks related to Credit Suisse.
Credit Suisse had previously requested the support of Swiss National Bank after losing almost 30% of its stock value.
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