First Credit Suisse shareholders file lawsuit against UBS
The takeover of the failed bank brought UBS a special profit of 35 billion dollars, while Credit Suisse shareholders lost almost everything. Now they are suing against the exchange ratio.
Presented himself as the savior of the nation: UBS President Colm Kelleher.
Photo: Fabrice Coffrini (AFP)
The Swiss public was amazed when they read the statement from UBS ten days ago that the last major bank in Switzerland thanks to the takeover of Credit Suisse 35 billion dollars special profit can identify. Two months ago it was said that Credit Suisse was on the brink of collapse.
UBS President Colm Kelleher presented himself as the savior of the nation. That’s why bonds worth CHF 16 billion were set to zero, and Credit Suisse shareholders received just CHF 3 billion for their bank, which was once one of the most valuable companies in Switzerland – or CHF 0.76 per share.
Many of the bondholders have already complained most against the Financial Market Authority and Credit Suisse. Now the first shareholders are suing UBS, as confirmed by Dimitri Santoro from the Zurich law firm Rüd Winkler Partner.
“All relevant circumstances must be taken into account when determining the exchange ratio.”
The logic behind the lawsuit is as follows, derived from a 2011 federal court ruling that reads: “In determining the exchange ratio, all relevant circumstances must be taken into account, in particular the assets of the companies involved. (…) The determining factor for determining the assets is the company value at going concern values.» The judgment also speaks of the assessment of the circumstances and of discretionary powers.
Plaintiffs assume a value of 30 to 35 billion
According to the arguments of the lawyers, the calculation of the exchange ratio should at least be based on the last market value of the shares before the merger was announced. On Friday, March 17, it was CHF 1.86, or almost two and a half times higher than the merger offer. Accordingly, UBS should have offered at least CHF 7.3 billion for Credit Suisse. There is also usually a premium to the market value in a merger, and this depends on the intrinsic value, the “enterprise value at going concern values” described above.
If you take this value, you get an even higher price, namely around 30 to 35 billion francs. Actually, it is not clear why that should not be the case in this case. After all, the auditing company PricewaterhouseCoopers confirmed on March 14 in the annual report published at the time that everything was fine at Credit Suisse. The report spoke of a book value of the share of 11.45 francs. In the quarterly report that the bank published a little later, the book value was even CHF 13.20.
Exchange ratio of 1.5 instead of 22
UBS itself states in a presentation on its website that the intrinsic value of Credit Suisse shares is CHF 11.15. Based on these values, the exchange ratio is just under 1.5 Credit Suisse shares per UBS share instead of 22.
According to Santoro, the lawsuits against UBS were filed with the Zurich commercial court, and a second was lodged with the magistrate in Zurich.
Screenshot of the lawsuit against UBS.
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