A shareholder of Credit Suisse has initiated legal action against UBS Group, seeking compensation of at least 1.06 million francs. The investor claims that he was unfairly disadvantaged by UBS’s government-brokered acquisition of the financially troubled Credit Suisse.
According to the lawsuit, UBS managed to acquire the shares at an incredibly low price of 0.76 Swiss francs per share, significantly below the closing price of 1.86 Swiss francs on March 17. This closing price represents the last trading day before the deal was agreed upon.
The shareholder argues that UBS obtained these shares at a substantial discount, implying an undervaluation of their true worth. As a result, the investor contends that he suffered financial losses and demands compensation from UBS for what he perceives as an unfair transaction.
The takeover deal, brokered by the government, allowed UBS to take advantage of the distressed situation faced by Credit Suisse, acquiring their shares at a heavily discounted rate. The plaintiff believes that this arrangement unfairly favored UBS and resulted in a significant financial detriment to Credit Suisse shareholders, including himself.
The legal action represents a growing tension between investors and financial institutions involved in government-backed takeover deals. Shareholders increasingly scrutinize such transactions, seeking accountability and fair treatment from the parties involved.
Legal Challenges Mount for UBS as Lawyer Questions Takeover Deal
Lawyer Dimitri Santoro, representing an undisclosed client, expressed his disapproval of the takeover deal involving Credit Suisse. In a letter to the Zurich Commercial Court, Santoro argued that the offer made by UBS to Credit Suisse shareholders was below the then-current stock price and disregarded the typical conventions of takeovers. He emphasized that takeover deals usually involve a high premium for shareholders and that UBS’s offer failed to reflect Credit Suisse’s broader value.
Although it remains unclear whether the court has received or evaluated the complaint, the potential progress of this case could encourage other shareholders to step forward. This would only exacerbate the legal challenges faced by UBS, which has already been confronted with numerous claims from bondholders since March. These claims, totaling at least 230 and representing approximately 2,500 affected bondholders, stem from the contentious write-down of a specific class of bonds called AT1s, which was part of the rescue package provided to Credit Suisse.
The Swiss government has expressed the view that Credit Suisse would have faced bankruptcy without the intervention, highlighting the UBS acquisition as the least detrimental option. As the situation unfolds, the outcome of this complaint could have broader implications for both Credit Suisse and UBS, potentially shaping the future trajectory of the companies and their relationships with shareholders.
UBS and Credit Suisse Silent on Complaint, Deal Timetable Likely Extended
Representatives from UBS and Credit Suisse have not provided any comments regarding the complaint filed by Dimitri Santoro, which SonntagsZeitung first reported. On behalf of his client, Santoro stated that the compensation being sought is calculated based on the difference between the offered price and the prevailing stock price multiplied by the number of shares held by his client.
Previously, UBS had announced its intention to close the deal by the end of May. However, the timetable will likely be extended into June due to ongoing negotiations between UBS and the Swiss government regarding the specific terms of a state guarantee for the transaction. The precise details of the state guarantee are still being deliberated.
As the situation continues to unfold, it remains to be seen how these developments will impact the finalization of the deal and the potential outcome of the complaint filed by Santoro’s client. The decisions made in the coming weeks will play a significant role in determining the future course for both UBS and Credit Suisse and their respective relationships with their shareholders.