The SASV, representing retail investors, seeks to file a legal challenge against UBS concerning the exchange ratio set out under Article 105 of the Swiss Merger Act. This challenge is on behalf of over 1,000 Credit Suisse equity investors who faced sharp losses during the bank’s acquisition by UBS earlier in March.
Notably, this takeover, supervised by Swiss authorities, excluded shareholders from both banks from voting on the deal.
Highlighting the controversial nature of the acquisition, the CHF 3bn (€3.13bn) that UBS paid for Credit Suisse starkly contrasts the latter’s market value--it was less than half of its worth on the last trading day before the deal was finalised and only a fraction of its book value.
UBS’s recent announcement of its independence from government assistance regarding the takeover has intensified public sentiment. This announcement is seen as an effort to placate the growing public discontent as Switzerland nears its national elections in October.
Despite these events, the SASV remains resolute in its pursuit of justice.
A major point of contention in the acquisition is the exchange ratio. Credit Suisse shareholders were set to receive one UBS share for every 22.48 of their own. With UBS’s CHF 17.11 closing price on 17 March 2023, each Credit Suisse share was undervalued at a mere 76 centimes--a stark drop from its CHF 1.86 market price just days before.
In an email correspondence to Delano, Arik Röschke, the general secretary of the SASV, said, “It is becoming increasingly clear that UBS secured a favourable deal at the expense of Credit Suisse shareholders: just last Friday, UBS terminated its CHF 9bn guarantee agreement with the Swiss government, causing its share price to rise by 4.7%.”
Moreover, since the takeover, UBS's share price has risen from nearly CHF 16 to over CHF 20. The seemingly rushed and baseless exchange ratio decision seems to overwhelmingly benefit UBS, the SASV argues.
This view becomes even more evident when considering the initial negotiations and Credit Suisse’s significant equity capital, which stood at CHF 54bn at the end of March, as highlighted by the SASV.
“UBS initially offered a lump sum of one billion francs, which was later increased to three billion. This review concerns not just Credit Suisse shareholders, but the entire Swiss financial sector, to prevent unchecked expropriations,” Röschke added.
The association plans to present its case in compliance with Switzerland’s Merger Act by Monday, meeting the two-month deadline following the deal’s June approval.
“A judicial review and adjustment of this exchange ratio by a qualified expert are crucial to ascertain the fair value of Credit Suisse and evaluate the appropriateness of the exchange ratio.”
A court decision is expected to take around 18 months, said Röschke.