KEB late entry bidder: Hana
Lone Star Funds' long-drawn-out exit from Korea Exchange Bank (KEB) appears to be finally drawing to a close with the late submission by Hana Financial Group of its bid in the auction of the full 57.27% stake held by Lone Star Funds and the Export Import Bank of Korea.
However, as confirmed by company spokespeople, Australia and New Zealand Banking Group (ANZ) – hitherto the favorite for the acquisition – is also still negotiating on the deal. “Korea is an important market in the global economy with strong trade ties across Asia, and ANZ believes that exploring strategic and organic growth opportunities in Korea is a logical fit with its super-regional strategy,” ANZ said in a formal statement on the situation.
Other factors are emerging to make this episode of the saga as complex and controversial as the preceding events. KEB’s union, which had close discussions with ANZ Bank over its takeover plans, has staged demonstrations and bought newspaper ads in Korea, protesting that Hana Financial does not have the capabilities or the funding to support what the ads claim is a c.$5 billion acquisition. The union apparently fears redundancies if a suitor like Hana Financial – which has similar operations – buys KEB.
Hana was previously seen as the leading candidate to acquire the 57% stake in Woori Financial Holdings currently being privatized by the Korean government. However, Hana now appears to have opted for KEB instead, a decision that some analysts have seen as better for its own business and balance sheet, though less attractive to government officials seeking to offload Woori. Hana Financial shares rose as markets welcomed its apparent pullback from the pricier Woori deal.
Further complicating the situation, Korea Development Bank, also mid-privatization and seeking to grow its operations, indicated an interest in KEB. However, according to the Korea JoongAng Daily, KDB, with its privatization still beholden to government priorities, had to bow to official objections and withdraw its offer.
With discussions still under way and no firm offer due until November 26th, the firm that is approved to purchase KEB may hinge on financing. ANZ is still very much in contention, but according to the Korean union ads and other market talk, Hana Financial has tabled a decidedly higher bid. “Financing the deal could be the biggest challenge,” said one Korean legal authority. “If what h as been published is true, I can’t believe that ANZ would come back in and offer more.”
The KEB union may ultimately settle for concessions from Hana Financial, rather than derailing the deal. And with a higher-than-expected price on the table for KEB, Lone Star may turn out the winner.
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