Extraordinary General Meeting of UBS on 7 September 2000.
UBS is convening an Extraordinary General Meeting on 7 September 2000 at which shareholders will be invited to approve an increase in the share capital to fund the merger transaction with PaineWebber. Shareholders will be requested to approve the creation of 38 million new UBS shares in the form of authorized capital and 17 million new UBS shares in the form of conditional capital. The Board of Directors will propose that UBS shareholders be paid a partial dividend of CHF 4.50 per share relating to the first nine months of 2000.
On 12 July 2000, UBS AG and PaineWebber Group Inc. announced that they had entered into a definitive merger agreement. The expected total consideration, based on UBS's share price before the announcement and assuming exercise of all PaineWebber options held by employees, is estimated at USD 12.4 billion. The form of the consideration will be in cash and in UBS shares, with the share component offering the opportunity of a tax-free exchange for PaineWebber shareholders.
At the Extraordinary General Meeting, UBS shareholders will be asked to approve the creation of 38 million new UBS shares in the form of authorized capital for the merger transaction and 17 million new UBS shares in the form of conditional capital for PaineWebber options outstanding beyond the merger exchange date. Due to the inter-relationship between the two categories, the maximum total number of shares issued either as authorized or conditional capital will not exceed 46 million shares. Any shares issued as a result of these approvals can only be used in the context of the merger transaction.
The Board of Directors will additionally propose that UBS shareholders on record as of
2 October 2000 be paid a partial dividend of CHF 4.50 per share relating to the first nine months of the year. This is intended to ensure equal treatment of UBS shareholders and PaineWebber stockholders, as PaineWebber stockholders will already have been paid interim dividends for nine months of the year at the merger exchange date.
The Board of Directors will further propose that Deloitte & Touche Experta AG be elected as independent Special Auditors in compliance with US Securities and Exchange Commission (SEC) requirements.
Creation of authorized capital
On 30 June 2000, approximately 146.7 million PaineWebber shares were outstanding. Under the terms of the merger agreement, the percentage of shares of PaineWebber common stock which will be convertible into UBS shares is fixed at 50% - at an exchange ratio of 0.4954 UBS shares for each PaineWebber share. Employee held options account for a further 33.6 million PaineWebber shares. Should all these options be exercised upon consummation of the merger, a maximum total of 45 million UBS shares would be needed. UBS will re-issue approximately 7 million UBS shares currently held in treasury, so that a maximum of 38 million shares in the form of authorized capital will be needed.
To avoid dilution of earnings and voting power, UBS's Board of Directors and the Group Executive Board are fully committed to keeping the final number of new UBS shares issued as small as possible, subject to maintaining a sound capitalization for the UBS Group. The number of shares that will finally be issued may be reduced by shares temporarily borrowed in the market. Any such borrowed shares will subsequently be replaced by purchases in the market. The Board of Directors proposes that it be granted the right to a "green shoe option" permitting issuance of additional shares from the approved authorized capital during a limited period after the completion of the merger to the extent that market conditions make such replacement purchases less economically desirable for shareholders.
Creation of conditional capital
The existing option plans for employees of PaineWebber will be taken over by UBS. If all PaineWebber options were rolled over into similar UBS instruments, a maximum of 17 million UBS shares would be needed to cover future exercise. These will be provided for by the proposed creation of conditional capital.
Zurich / Basel, 3 August 2000
Information concerning proxy materials
This communication is not a solicitation of a proxy from any security holder of Paine Webber Group Inc. UBS and PaineWebber will be filing with the Securities and Exchange Commission a proxy statement/prospectus to be mailed to PaineWebber security holders and other relevant documents concerning the planned merger of PaineWebber into a subsidiary of UBS. WE URGE INVESTORS IN PAINEWEBBER TO READ THE PROXY STATEMENT/PROSPECTUS AND ANY OTHER RELEVANT DOCUMENTS TO BE FILED WITH THE SEC, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. Investors will be able to obtain the documents free of charge at the SEC's website, www.sec.gov. In addition, documents filed with the SEC by UBS will be available free of charge from Investor Relations, UBS, Stockerstrasse 64, CH-8098 Zurich. Documents filed with the SEC by PaineWebber will be available free of charge from Geraldine Banyai, Assistant Secretary, 1285 Avenue of the Americas, New York, New York 10019.
PaineWebber and its directors and executive officers may be deemed to be participants in the solicitation of proxies from the security holders of PaineWebber in favor of the merger. The directors and executive officers of PaineWebber include the following: D. B. Marron; M. Alexander; S. P. Baum; E. G. Bewkes, Jr.; R. Braun; R. A. Dolan; F. P. Doyle; J. T. Fadden; J. J. Grano, Jr.; J. W. Kinnear; R. N., Kiyono; T. A. Levine; R. M. Loeffler; E. Randall, III; H. Rosovsky; K. Sekiguchi, R. H. Silver; M. B. Sutton; and J. R. Torell III. Collectively, as of February 4, 2000, the directors and executive officers of PaineWebber may be deemed to beneficially own approximately 4.8% of the outstanding shares of PaineWebber common stock. Security holders of PaineWebber may obtain additional information regarding the interests of such participants by reading the proxy statement/prospectus when it becomes available.
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