UBS AG to buy PaineWebber Group for 1.53 times revenue

Weekly Corporate Growth Report, Jul 24, 2000

The Deal: The Swiss bank UBS AG has agreed to acquire PaineWebber Group Inc. in a half-stock, half-cash $12 billion deal. The mid-sized brokerage firm has always insisted on remaining independent, but recently there has been speculation that it needed a large merger partner. PainWebber's major competitors have become much larger and have grown more diversified, moving into the realm of investment banking and other financial services. It is at risk of being left behind due to the increased competition from low-cost online trading. PaineWebber's board agreed to sell the firm for $82.42 a share.

Discussion: PaineWebber Group provides retail brokerage, investment banking, municipal securities underwriting, real estate and transaction services. Institutional stock and bond trading and asset management are also offered through its Mitchell Hutchins subsidiary. PaineWebber Group is involved in online trading and related services. Paine Webber's clients include individuals, institutions, corporations, public agencies and state and local governments . The company has more than 300 offices worldwide.

UBS AG provides financial services through three segments. Its UBS Switzerland unit includes its consumer and corporate banking in Switzerland, as well as its offshore private banking services. UBS Asset Management offers individual and institutional asset management, mutual funds and other services. The company's UBS Warburg, formerly Warburg Dillon Read, provides investment banking, corporate finance and other investment services.