UBS to acquire Credit Suisse; 5 biggest bank acquisitions and mergers in recent history
In recent news, UBS Group AG will reportedly offer a sum approximating 3.25 billion dollars to take over the embattled Credit Suisse. According to reports, the troubled Swiss lender is backed on this deal by its biggest stakeholder. Swiss President Alain Berset termed the deal as, “one of great breadth for the stability of international finance.” He further said, “An uncontrollable collapse of Credit Suisse would lead to incalculable consequences for the country and the international financial system.”
Credit Suisse was apprehensive about the initial offer of 1 billion dollars by UBS as it deemed the offer to be too low, according to people familiar with the matter. They further said that the bank believed that the one-billion-dollar deal could potentially hurt employees and shareholders in possession of deferred stock.
A cost of 0.25 francs per share was to be paid in stock as per the initial offer communicated by UBS on Sunday. According to a Financial Times report, UBS had demanded a material adverse change that nullifies the deal if its credit deferment exceeds 100 basis points.
The recent collapse of the Silicon Valley Bank followed by a rout in Credit Suisse stock sent shockwaves around the globe, exacerbating panic among investors who dumped the Swiss bank’s shares and bonds. A brief respite provided by the Swiss National Bank arrested the fall to some extent, but the bigger crisis continues to loom in the background, fueled by investor fears.
In the following section, we have listed the 5 biggest bank mergers and acquisitions in the past decade.
FirstMerit Bank acquires Citizens Republic Bancorp
On September 13, 2012, FirstMerit Corporation, based in Akron, Ohio, declared its intention to purchase Citizens in a stock-for-stock deal estimated to be worth 912 million dollars. The merger was planned to be finalised in the second quarter of 2013. The deal was completed on April 12, 2013.
Hudson City Bancorp acquires M&T
On August 27, 2012, Buffalo, New York-based M&T Bank and Hudson City Bancorp reached a 3.7 billion dollars’ worth purchase agreement. After receiving final approval from the Federal Reserve in September 2015, Hudson City Bank became a subsidiary of M&T on November 1, 2015. It is by far the longest delayed bank merger in history, taking 1,129 days. Hudson City has been a division of M&T since November 1.
KeyBank acquires First Niagara Bank
First Niagara Bank was purchased by KeyCorp for 4.1 billion dollars in cash and stock on July 29, 2016. With a presence in both Philadelphia and Pittsburgh, the transaction expanded KeyBank’s market share in Upstate New York and New England while also allowing it to enter Pennsylvania for the first time.
BB&T merges with SunTrust Banks
On February 7, 2019, it was announced that SunTrust Banks, based in Atlanta, and BB&T, based in Winston-Salem, would merge on an equal footing to form the eighth-largest bank in the United States. That would represent the largest bank acquisition since the financial crisis of 2007–2009. The deal was worth 66 billion dollars.
Toronto-Dominion Bank acquires Cowen Inc
TD Bank said in July 2022 that it was considering buying US brokerage business Cowen. The following month, TD and Cowen reached an agreement to purchase Cowen for 1.3 billion dollars in cash, with Cowen stockholders receiving US$39 a share. TD decreased its ownership of Charles Schwab Corporation from 13.4% to 12% to pay for the acquisition by selling more than 28 million common shares without voting.
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