Hana denies asking Lone Start to cut KEB sale price
Hana Financial Group has denied reports that it had asked Lone Star to cut the $4.16 billion acquisition price for Korea Exchange Bank (KEB) by one fifth. It was claimed that the US private equity firm responded by threatening to walk away from the deal and reopen negotiations with Australia and New Zealand Banking Group (ANZ).
Hana said in a statement that it has not been in contact with Lone Start regarding the sale price, Reuters reported.
The private equity firm, which bought a 51% stake in KEB for $1.3 billion in 2003, was found guilty of manipulating the bank's stock price ahead of the purchase. As a result, Korea's Financial Services Commission said this week that it had begun the process of ordering Lone Star to reduce its stake in the bank to below 10%.
Last November, Hana agreed to buy Lone Star's interest in KEB. The private equity firm's previous attempts at an exit - including via auction in 2005, to Kookmin Bank for $7.3 billion in 2006, and to HSBC for $6.3 billion in 2008 - have all been blocked or stalled by regulators due to the long-running court saga. Lone Star managed to sell down part of its stake in 2007.
It was reported in July that Hana and Lone Star had agreed to cut the price tag by about $260 million from its original $4.4 billion. This came shortly after Hana agreed to lend $1.4 billion to Lone Star to keep the deal alive. The private equity firm has also received $1.6 billion in dividends during its ownership of KEB and $1.1 billion from the 2007 sell down.
Rumors of a further price cut were in part stimulated by KEB's stock price falling by about 17% since early July.
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