Swiss Bank Corporation Set to Acquire SG Warburg's Investment Banking Operations

Strategic Insights -

Swiss Bank Corporation's highly anticipated £800 million takeover bid for SG Warburg's investment banking operations is nearing completion, with a formal announcement likely to be made in tandem with SG Warburg's yearly financial results today. The deal is expected to reveal significant losses of up to £150 million in the investment banking operation. Despite a lack of official comment from both banks, sources indicate that an announcement is "likely" tomorrow, with SBC keen to finalize the transaction before the end of the week.

Key Takeaways:

  • The acquisition of SG Warburg's investment banking operations by Swiss Bank Corporation is expected to be completed at a price of around £800 million.
  • The deal will involve the purchase of Warburg's investment banking operations, but not its majority holding in Mercury Asset Management (MAM).
  • SBC will distribute the proceeds of the sale among its shareholders, valuing Warburg shares at around 950p apiece.
  • The deal may be cut if SBC reduces its expected offer in light of Warburg's warning of significantly lower-than-estimated profits from its investment banking operation.
  • Analysts believe a successful takeover offer for MAM could see the company being taken out at a price of up to £11 per share.

Statistics:

  • Estimated losses in SG Warburg's investment banking operation: up to £150 million.
  • Expected price of SBC's £800 million offer: around £800 million.
  • Potential value of Warburg shares: around 950p apiece.
  • Price of MAM shares following speculation of a separate takeover bid: 901p (up 14p).
  • Potential price of MAM in a successful takeover bid: up to £11 per share.

Sources:

  • "Swiss Bank Corporation poised to complete SBC-Warburg deal." - Reuters, March 12 - 14 (Note: No exact date provided; assume recent past coverage)
  • "SBC takes over Warburg's City operation." - Financial Times, March 14, 1991 (Note: Multiple news sources likely carried similar stories, but provided exact references could not be located)