In the midst of the excruciating credit crunch, global financial behemoths are looking for ways to reinvent themselves. Part of this includes merely unloading divisions.
Take a look at UBS AG (NYSE: UBS). The Swiss-based financial services firm is trying to sell its U.S. wealth management unit, according to the Wall Street Journal.
In fact, the deal has been on the market since the summer of last year. UBS has pitched a variety of operators like Morgan Stanley (NYSE: MS), Wachovia Securities, Bank of America (NYSE: BAC) and JP Morgan (NYSE: JPM).
Yet, with the deflation of market caps in the financial sector – as well as low capital bases – it's nearly impossible to fetch an M&A deal at any sort of premium. At the same time, UBS's U.S. wealth unit is facing pressure as the industry continues to consolidate, such as with Bank America's combination with Merrill Lynch and the linkup of Morgan Stanley and Citigroup's (NYSE: C) brokerage operation.
Moreover, given that UBS has sustained about $49 billion in write-downs over the past few years, the firm probably has no choice but to do a deal at a discounted price.
Tom Taulli is the author of various books, including The Complete M&A Handbook
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