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UBS to buy PaineWebber
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July 12, 2000: 12:48 a.m. ET
Swiss bank UBS to pay $12 billion for No. 4 U.S. brokerage firm
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NEW YORK (CNNfn) - Swiss bank UBS agreed late Tuesday to purchase securities firm PaineWebber for about $12 billion, representing a significant premium for one of the most well known brokerage houses in the United States.
A PaineWebber spokesman confirmed a bid from Union Bank of Switzerland, first reported by the Financial Times on CNN's Moneyline Tuesday. Citing sources close to the merger talks, the Wall Street Journal reported early Wednesday that the board of PaineWebber had agreed to sell the firm for $73.50 per share in a half -cash, half-stock deal.
The boards of both companies will meet and are expected to sign final papers Wednesday.
"There has been so much speculation in the marketplace," Amy Butte, Bear Stearns brokerage analyst, told CNNfn. "Whether it is over PaineWebber, Merrill Lynch, Lehman Brothers and now it seems like a deal will actually come to fruition."
UBS, a global financial services company and the leading bank in Switzerland, will bid $73 per share, a 46 percent premium over Paine Webber Group's (PWJ: Research, Estimates) Tuesday close of 49-15/16.
Founded in 1879, PaineWebber is the No. 4 U.S. brokerage firm with more than 20,000 employees and a valuation of about $7 billion before the UBS bid. It also has assets of $452 billion and serves about 2.7 million clients. The company added 46 billion in assets through its June acquisition of regional U.S. brokerage J.C. Bradford & Co.
The New York-based full service brokerage earned $176.3 million, or $1.16 per diluted share, in the first quarter, beating analyst estimates by seven cents a share. PaineWebber earned $629 million in 1999 on sales of $7.8 billion.
UBS is anxious to bolster its investment bank UBS Warburg. According to the Financial Times, UBS has been on the lookout for a U.S. securities firm to gain access to the wealthy client market.
"PaineWebber is an attractive target for a few reasons," Bear Stearns' Butte said. "One and most importantly is the high net worth business. Second, it does have a institutional presence. And third, if a foreign firm where to come in and buy PaineWebber, you have very little crossover meaning it is easy to find synergies in this type of a transaction."
"UBS gets one of the top flight U.S. high net worth distribution systems. PaineWebber gets a global platform, by which it can continue to pursue its high net worth retail business," she added. 
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