After regulatory hurdles and delays nearly squashed the $4.3 billion deal for Korea Exchange Bank, South Korea’s Hana Financial Group and buyout shop Lone Star have reportedly managed to extend the deal for six months, Reuters reported, citing the Seoul Economic Daily. The paper wrote that Hana would acquire a less than 10% stake in KEB as a means to ensure its commitment to the deal. Lone Star bought KEB in 2003 for $1.2 billion.
(Reuters) – South Korea’s Hana Financial Group Inc and U.S. buyout fund Lone Star have agreed to extend the $4.3 billion takeover deal of Korea Exchange Bank for six months, a media report said.
The sale has been hanging in the balance over regulatory delays to approval of the deal.
Citing an unnamed source, the Seoul Economic Daily reported that both parties were fine-tuning issues and would soon formalise an extension for what could be the country’s biggest banking deal.
A Hana spokesman said he could not confirm the report.
The paper reported that Hana would acquire a smaller stake of less than 10 percent of KEB from Lone Star to ensure their commitment to the deal.
Even after the original deadline for the transaction lapsed in late May, Hana and Lone Star continued to discuss an extension of the deal as regulatory delays threatened to derail Hana’s purchase of a 51 percent stake in KEB.
Regulators have pushed back approval of the Hana’s proposed acquisition, citing unresolved legal disputes following a surprise Supreme Court decision in March to overturn a lower court acquittal of a former representative of Lone Star’s Korean operation on stock price manipulation charges in relation to a unit of KEB.
The case was sent back to the High Court.
Lone Star’s KEB ownership has been a problematic one. Its efforts to unload the stake have been a long and eventful process, including an auction that began in 2005, failed bidders, office raids and a changing cast of players.
Lone Star bought KEB in 2003 for $1.2 billion and sold down part of its stake in 2007. It had previously attempted to sell KEB to Kookmin Bank for $7.3 billion in 2006 and then to HSBC Holdings Plc for $6.3 billion in 2008. (Reporting by Ju-min Park; Editing by Chris Lewis)