Hana Financial Group Inc won approval for its 3.9 trillion won (US$3.5 billion) purchase of Korea Exchange Bank (KEB) from Lone Star Funds, clearing the final barrier for the US fund to exit its investment.
The Financial Services Commission ruled yesterday that Seoul-based Hana, South Korea’s fourth-largest financial group by assets, has sufficient health and funding to buy the 51 percent stake in KEB, the regulator said in a statement.
Hana chairman Kim Seung-yu has been pushing to complete the deal for more than a year to help narrow the lead of bigger rivals KB Financial Group Inc and Woori Finance Holdings Co. Yesterday’s approval allows Dallas-based Lone Star to end an eight-year investment that has been plagued by legal disputes and a public backlash over profits.
“For Lone Star, despite lingering public opinion opposing the takeover, a major hurdle for them to exit has been lifted,” said Heo Pil-seok, chief executive officer of Midas International Asset Management Ltd, which oversees about US$1 billion in assets. “It’s true that this decision is coming later than expected, but the market will accept the approval favorably.”
“Now our job is to make Hana and KEB global banks that represent South Korea and explore markets around the world,” Kim said in Seoul.
He said the deal will be completed within five working days.
Hana will also buy a 6.25 percent stake in KEB held by Export-Import Bank of Korea, Kim said.
Lone Star in November cleared a hurdle to end its investment when the regulator ruled that the fund should sell at least 41 percent of KEB, without dictating how it should offload the stake. Last month, Lone Star agreed to cut the price by 11 percent, a second reduction, and extend a deadline for the deal to be completed by the end next month.
Two calls made out of regular work hours to the office of Lone Star’s spokesman in the US went unanswered, as did an e- mail seeking comment.
Courts, regulators and lawmakers helped derail Lone Star’s two earlier attempts to sell the stake starting as far back as 2006. HSBC Holdings PLC dropped a US$6 billion bid for the holding in September 2008 after authorities left the proposed transaction in limbo for more than a year because of legal disputes.
Standard Chartered PLC’s purchase of Korea First Bank in 2005 for US$3.2 billion and Citigroup Inc’s acquisition of KorAm Bank for US$2.7 billion in 2004 are among the biggest banking takeovers so far in South Korea.