Switzerland-based Ethos Foundation is joining a class action against the valuation given to Credit Suisse at the time of its takeover by UBS.
Zurich-based law firm Baumgartner Mächler is preparing a lawsuit on behalf of a single shareholder that will be filed before a competent court in Zurich.
The merger act provides the legal basis for shareholders to claim adequate compensation in the form of cash for their shares and, if successful, Credit Suisse shareholders would benefit from the new exchange share ratio, according to lawyers at LegalPass, the start-up launching the class action.
Shareholders can claim compensation from what it is considered a discounted price for the acquisition of Credit Suisse on LegalPass’s platform.
The goal of the class action is to obtain cash compensation equal to the difference in value between the share price set by the merger agreement and the price set by the court, it said.
Ethos Foundation is participating in the financing of the action, but will not receive any compensation from LegalPass.
Credit Suisse was valued at CHF3bn – or an exchange ratio of one UBS share for 22.48 Credit Suisse´s shares – the foundation said in a statement, adding that the lender was worth CHF7bn at the closing day of trading on Friday 17 March, two days before the announcement of the takeover.
UBS and the Swiss government, which gave a CHF9bn guarantee to the bank from losses arising from the acquisition of what it considers non-core assets announced the takeover, brokered over a weekend by Swiss authorities, on 19 March.
The guarantee comes into play only if UBS actually has to accept losses when selling these assets and these losses exceed CHF5bn, according to the government.
The Swiss government enforced an emergency ordinance to grant extraordinary liquidity assistance loans to Credit Suisse, triggering the decision to write down AT1 bonds worth CHF16bn.
The financial market supervisory authority FINMA practically waived the takeover citing the protection of the stability of the banking system in Switzerland and internationally.
“Since FINMA has decided to withdraw shareholders’ voting rights, the only way to challenge the exchange ratio [of the merger] is to go to court, as LegalPass intends to do”, said Vincent Kaufmann, Ethos’ cheif executive officer.