Why Credit Suisse Stock Is Crumbling Today

Credit Suisse Group CS shares are trading lower Monday after UBS Group AG UBS agreed to acquire the bank for $3.2 billion. 

What Happened: UBS announced plans to acquire embattled Credit Suisse in an all-share transaction on Sunday. The takeover is expected to strengthen UBS's position as a Swiss-based global wealth manager. 

The discussions were initiated and have the full support of the Swiss Federal Department of Finance, FINMA and the Swiss National Bank. 

Under the terms, Credit Suisse shareholders will receive 1 share of UBS for every 22.48 Credit Suisse shares held. 

"This acquisition is attractive for UBS shareholders but, let us be clear, as far as Credit Suisse is concerned, this is an emergency rescue. We have structured a transaction which will preserve the value left in the business while limiting our downside exposure," said Colm Kelleher, chairman of UBS.

The combination of the two businesses is expected to generate an annual run-rate of cost reductions of more than $8 billion by 2027. UBS also expects the transaction to be EPS accretive by 2027. Credit Suisse had a market cap of nearly $8 billion as of Friday's close. 

"Acquiring Credit Suisse’s capabilities in wealth, asset management and Swiss universal banking will augment UBS’s strategy of growing its capital-light businesses. The transaction will bring benefits to clients and create long-term sustainable value for our investors," Kelleher added.

Related Link: It's Official: UBS Confirms Deal To Buy Troubled Peer Credit Suisse For $3.2B In Swiss Central Bank-Brokered Deal

CS Price Action: The news comes after Credit Suisse shares fell more than 20% last week. The stock is down more than 75% over the last year.

Credit Suisse shares were down 58% at 84 cents at the time of publication, according to Benzinga Pro.

Photo: courtesy of Credit Suisse.