Bank Sarasin Plunges as Safra Deal Thwarts Speculation of Higher Baer Bid

Bank Sarasin & Cie. AG (BSAN) fell the most since 1990 in Zurich trading after Safra Group’s agreement to buy a controlling stake in the Swiss wealth manager disappointed investors hoping for a higher offer from Julius Baer Group Ltd. (BAER)

Sarasin dropped as much as 18 percent and was down 5.30 Swiss francs to 29 francs at 12:55 p.m. local time, valuing the company at 1.8 billion francs ($1.96 billion).

While Safra agreed to pay Rabobank Groep 36 francs a piece for Sarasin’s B shares, Baer planned to offer between 35 and 45 francs per share for the 170-year-old bank, two people with knowledge of the bidding process said on Nov. 8. Baer, the largest publicly traded Swiss private bank, may have also made a higher offer than Safra to Sarasin’s minority shareholders.

“The expectation had been that Julius Baer was a leading contender and perhaps could have paid more,” Matthew Clark, an analyst at Keefe, Bruyette & Woods Ltd. in London, said today. “Under Safra’s control, you are less likely to get a generous offer for the remaining stock.”

Safra, founded in the Syrian city of Aleppo in the 19th century, agreed on Nov. 25 after the close of trading to pay more than 1 billion francs for Rabobank’s controlling stake in Sarasin. Together with the purchase of A shares, Safra will gain 68.6 percent of Sarasin’s voting rights and a 46 percent equity interest, the companies said in a statement.

Minorities Offer

Sarasin expects the transaction to be completed within four to six months, Benedikt Gratzl, a spokesman for the Basel, Switzerland-based bank, said today by phone.

“That will trigger the offer for the minorities in the first half of 2012,” he said.

Safra will be obliged under Swiss law to offer minority shareholders whichever is higher out of the 60-day average stock price -- currently about 30.10 francs -- or 75 percent of the price paid to Rabobank, according to Daniele Brupbacher, an analyst at UBS AG.

UBS today cut its rating on Sarasin to “sell” from “neutral” while Zuercher Kantonalbank AG downgraded the stock to “market perform” from “outperform.”

A spokesman for Baer declined to comment today on whether the firm had made a bid for Rabobank’s stake in Sarasin.

Firms in Safra Group’s network include Safra National Bank of New York and Brazil’s Banco Safra SA, which is controlled by Joseph Safra. He’s the world’s 68th richest person with an $11.4 billion net worth as of March 2011, according to Forbes magazine.

The Safras are heirs of 19th century financier Jacob Safra, a Syrian native whose banking business dates back to the Ottoman Empire. The family was based in Lebanon in the 1940s as part of the Jewish community.

To contact the reporter on this story: Giles Broom in Geneva at gbroom@bloomberg.net

To contact the editor responsible for this story: Frank Connelly at fconnelly@bloomberg.net

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