UBS AG will buy brokerage PaineWebber Group Inc. for $10.8 billion, giving No. 1 Swiss bank access to millions of wealthy U.S. investors. The deal values PaineWebber, the No. 4 U.S. brokerage, at $73.50 a share, and spurred a rally in PaineWebber shares.
Meanwhile, UBS shares fell 18.50 Swiss francs to 224 on the Zurich exchange and closed at 132 5/8 on the New York Stock Exchange, down 16 1/8, partly because the bank intends to issue new shares to pay for the deal. European analysts said the deal gives the Swiss bank a much stronger foothold in the United States.
But U.S. analysts pointed to the mixed record of banks buying brokerages, saying UBS could find it difficult to integrate PaineWebber brokers into its organization. UBS will have access to the client lists of PaineWebber’s 8,500 U.S. brokers—2.7 million individuals with $452.4 billion in assets as of March 31 under the terms of the deal.
PaineWebber will gain access to UBS’s investment banking and money-management services. PaineWebber has remained an independent domestic brokerage firm for 120 years.
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