In the legal dispute before the Zurich Commercial Court over the valuation of Credit Suisse during its acquisition by UBS, additional plaintiffs' representatives are demanding a new independent appraisal. According to their assessment, the actual value of CS shares may have been up to 12 times higher than the price paid.
On August 28, Credit Suisse (CS) plaintiffs' representatives Legalpass and Zurich law firm Baumgartner Mächler filed a request for an independent appraisal with the Zurich Commercial Court.
Liechtenstein law firm Lennert Partners had also previously called for an independent revaluation.
Fair Compensation?
The request was submitted by Legalpass as part of their response to UBS’s legal defense, according to a statement released Tuesday. The issue at hand is «whether the 3 billion Swiss francs ($3.5 billion) was fair compensation for the Credit Suisse businesses acquired and continued by UBS».
The plaintiffs' representatives cite an independent valuation by IVA Valuation & Advisory and a legal opinion from Prof. Dr. iur Harald Bärtschi. Depending on the valuation method used, the CS share price was estimated to be between 3.67 francs and 9.26 francs. UBS had set the exchange ratio at 0.76 francs per CS share.
Based on Ongoing Operations
The plaintiffs argue that Credit Suisse’s valuation should be based on the continuation of its business operations. By 19 March 2023, it was already clear that CS activities would be continued as part of UBS.
«The valuation must reflect the actual circumstances, i.e., the continuation of the business, and not hypothetical or irrelevant scenarios like bankruptcy or bail-in,» the statement reads. This position aligns with a Swiss Federal Court precedent.
The IVA valuation necessarily relied on publicly available information, as there was no merger report and UBS did not disclose internal CS data. Using the Dividend Discount Model (DDM), the appraisal arrived at a value range of 3.67 to 4.39 francs per share. IVA also extrapolated financial projections from a neutral analyst's report prepared just before the merger, indicating a value between 7.70 and 9.26 francs per share.
Economically Unjustifiable
Overall, the IVA report concludes that «the agreed exchange ratio of 22.48 Credit Suisse shares for one UBS share on March 19, 2023, is not economically justifiable.»
The Swiss Merger Act grants shareholders the right to have the exchange ratio reviewed, and this must be properly enforced. In addition to a new appraisal, the plaintiffs are requesting that the court compel UBS to disclose internal financial data on CS, which could lead to results «that significantly differ from the private appraisal, both upward and downward».
Approximately 3,000 Plaintiffs
Legalpass, founded in 2022 by attorneys Philippe Grivat and Alexandre Osti, is a Swiss startup based in Lausanne. In June last year, the firm filed the «Credit US» class action lawsuit in the Zurich Commercial Court. According to earlier reports, around 3,000 former Credit Suisse shareholders have joined the lawsuit.
