Through TheFLY's Eyes: UBS AG
from Theflyonthewall.com








UBS Extends Its Global Reach

UBS (UBS) Tuesday agreed to buy Brazil-based Banco Pactual SA, a financial services company, for about $2.6B.

Analysts say the deal is part of Switzerland-based UBS’s strategy to bolster its presence in emerging markets: Brazil is one of largest and fastest-growing developing markets in the world. A comprehensive determination of Banco Pactual’s financial assets was not immediately available, but Banco Pactual has about $18.6B of assets under management, with another $4.6B under management for high-net-worth individuals.

UBS, Europe’s second-largest bank, paid 11x to 14x Banco’s 2007 earnings, or about $2.6B, to acquire the company, with $1B up-front and another $1.6B payment tied to performance triggers.

The market’s initial response to the deal Tuesday was mildly favorable. After dropping more than 50c, UBS’s stock recovered and was down only 20c to $122.46 in early Tuesday afternoon trading. Meanwhile, competitor investment banks Credit Suisse (CSR) rose 20c to $63.75, HSBC (HBC) increased 55c to $91.97, and Citigroup (C) climbed 18c to $50.33.

Merrill Lynch noted that Citigroup and Goldman Sachs (GS) were both believed to be eyeing Brazilian acquisitions. Therefore, in the near term, Merrill believes the market will view UBS as the emerging winner by acquiring a Brazilian asset at a reasonable price.