IRVINE, Calif. July 12, 2000 (PRIMEZONE) - UBS AG (UBSZn.S) (NYSE:UBS) said on Wednesday it would buy brokerage PaineWebber Group Inc. (NYSE:PWJ) for $10.8 billion, in a move that will give Switzerland's No. 1 bank access to millions of wealthy U.S. investors. The deal, which values the No. 4 U.S. brokerage at 47 percent premium over its closing stock price Tuesday, signals European banks' determination to gain a foothold in the world's largest investment market.
The move will turn UBS into one of the world's biggest wealth managers, Other US based brokerage firms that are possible European acquisition candidates include MH Meyerson (Nasdaq:MHMY), which has recently authorized a stock buyback program. Trading at $4.25 the stock price is equal to book value, and the company reported over $13 per share in revenues with positive earnings. MHMY is a securities firm that conducts its business through eight separate divisions: Emyerson.com (Electronic Trading Subsidiary), wholesale trading, investment banking, The Company clears all transactions for its retail customers with Bear Stearns Securities Corp.
The transaction gives UBS access to the client list of PaineWebber's 8,500 U.S. brokers -- 2.7 million individuals with $452.4 billion in assets as of March 31. PaineWebber, long seen as a takeover target because it was one of the few remaining independent U.S. brokers, gains access to UBS's investment banking and money-management services but will end a 120-year history as a domestic brokerage firm.
UBS, the result of a 1998 merger between Union Bank of Switzerland and Swiss Bank Corp, already has built an investment banking business, which operates as UBS Warburg in the United States. The bank also owns Brinson, a Chicago-based institutional money manager. It has more than $1 trillion in client assets. That puts it in the same ranks as the No. 1 U.S. mutual fund company Fidelity Investments, which manages around $1.1 trillion, and the No. 1 U.S. brokerage, Merrill Lynch and Co. Inc (NYSE:MER), which has client assets of around $1.8 trillion.
Ubs May Strike Again
UBS, like other European banks such as Deutsche, is eager to enter the U.S. investment market. The bank may acquire even more financial firms to achieve its ambition of becoming one of the biggest global wealth managers.
"With this proposition here, we will be able to grow organically much faster than we could otherwise, but it will not end here," UBS' Ospel told journalists. "We will have to supplement organic growth with acquisitions." Other European financial institutions, have been on the hunt for U.S. money managers lately, with France's CDC buying Nvest (NYSE:NEW) and AXA's (AXAF.PA) Alliance Capital (NYSE:AC) affiliate acquiring Sanford Bernstein. Europe's largest bank, Deutsche, bought U.S. investment bank Bankers Trust last year. Britain's HSBC (HSBA.L) acquired Republic New York last year.
At the same time, U.S. banks such as Chase Manhattan (NYSE:CMB) and FleetBoston (NYSE:FBF), have beefed up their securities businesses through acquisitions. The deals have been spurred by U.S. deregulation and banks' desire to diversify from the slow-growing lending business, analysts said.