- UBS has submitted its CS takeover document to the US Securities and Exchange Commission.
- In it, she puts the possible book gain from the transaction at around $35 billion.
- UBS intends to post the book profit as early as the second quarter. Whether the acquisition will be completed depends on the approval of the tax authorities in various countries.
In the approximately 100-page document, the total price of the Credit Suisse takeover is currently (as of May 5) at around 3.5 billion US dollars.
As is well known, UBS is offering CS shareholders 1 treasury share for every 22.48 CS shares, plus outstanding share-based compensation for Credit Suisse employees worth 0.2 billion, which results in the total price mentioned.
CS: Bought for 3.5 billion – worth 38 billion
According to this calculation, the previous Credit Suisse shareholders will hold around 5.1 percent of the new UBS after the conversion, and the old UBS shareholders will hold 94.9 percent accordingly. Since the assets of Credit Suisse at the time of the takeover are worth significantly more than these 3.5 billion, UBS has made a large book profit from the transaction. This so-called negative goodwill (or badwill) is estimated in the document at 34.8 billion US dollars.
This was determined on the basis of the estimated fair value of the assets acquired, the liabilities assumed and the consideration transferred. The fair value of the CS assets is given as a total of 38.2 billion.
Whether such a possible book profit will already be posted in the second quarter will probably depend on whether the acquisition will be completed by mid-year. UBS assumes that this is the case. At the moment, however, the approval of the tax authorities in various countries is still missing.
For SRF business editor Matthias Heim, it is not yet possible to assess whether the book profit will ultimately make UBS the winner. The fact that UBS only paid “so little” was due to the circumstances. “The takeover came about under extreme time pressure because it was clear that a solution had to be found this weekend – mid-March,” says Heim. UBS could therefore practically dictate the price.
Risk factor US banking crisis
The question of whether the Federal Council and the National Bank could lose out is also still open. The alternative would have been for the state – i.e. the federal government – to take over the ailing CS, but the Federal Council explicitly did not want that, according to Heim. It is possible that the parliamentary commission of inquiry will now shed more light on what happened in the days and weeks before the takeover.
After all, according to Heim, there is a good chance that the federal government will not have to spend the nine billion francs provided to secure the takeover. “UBS has already made large write-offs of its own accord and can still post a one-off profit of around 35 billion,” says business editor Heim.
Although it is unlikely that huge billion-dollar holes will open up now, it is still not impossible, because there could still be some unknown risks slumbering in the books of CS. In Heim’s view, whether this will ultimately lead to losses or profits also depends very much on whether the banking crisis in the USA continues to spread or whether the storm is over.