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UBS Group AG is offering to buy Credit Suisse Group AG for up to $1 billion, a deal that the beleaguered Swiss firm is pushing back with support from its largest shareholder.
Credit Suisse, which ended Friday with a market value of about 7.4 billion francs ($8 billion), believes the offer is too low and will harm shareholders and employees, who had knowledge of the matter. Stock has been postponed, according to people in the know.
The UBS offer was communicated on Sunday with a price of 0.25 francs per share to be paid in stock. The Financial Times reported that UBS also insisted on a significant adverse change that cancels the deal if its credit default rises by 100 basis points or more. Credit Suisse closed down 8% at 1.86 francs on Friday.
Swiss officials are looking to broker a deal that will address the Credit Suisse debacle that sent shock waves through the global financial system last week when panicked investors dumped their shares and bonds following the collapse of several smaller US lenders. . A liquidity backstop by the Swiss central bank briefly halted the decline, but the market drama carries the risk that customers or counterparties will continue to flee, with potential implications for the wider industry.
Complex discussions have weighed on Swiss and US officials over what would be the first combination of two global systemically important banks since the financial crisis, according to people with knowledge of the matter. Talks accelerated on Saturday, with all sides pushing for a solution that could be quickly executed after a week in which customers pulled money and counterparties backed out of some transactions with Credit Suisse.
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