Government scared Temasek to sell
By Kim Jae-won
Temasek Holdings of Singapore sold off its sizeable stake in Hana Financial because of fears that the latter’s plan to acquire Woori Financial might invite intervention by the Korean government in the merged financial provider, said a high-placed source familiar with the issue, Monday.
“Temasek was afraid the government would intervene in Hana’s management if it merged with Woori,” the source told The Korea Times on condition of anonymity.
Hana, the fourth largest financial institution by assets here, has been trying to take over Woori, the largest, in a complicated plan scheme involving stock swaps and outside investors including the government. Woori is under the control of the Korea Deposit Insurance Corp. (KDIC), a government agency, and is up for privatization by June 2011.
Temasek Holdings, Hana’s largest single stakeholder, made a surprise sale of all its holdings accounting for 9.6 percent of the total shares for 680.9 billion won ($607 million), or 33,400 won per share, Thursday. Hana saw its shares tumble 7.3 percent to close at 32,950 won on the day.
“Temasek’s sales surely had negative effect on Hana,” the source said.
It was widely believed that Hana preferred to buy some 27 percent of Woori’s stake in cash, and buy 30 percent more in swapping stocks with KDIC, which owns 57 percent stake of Woori.
Goldman Sachs is now the largest shareholder in Hana with an 8.66 percent stake.
Analysts say that, if Goldman Sachs and AllianceBernstein, which owns a 7.31 percent stake in Hana, follow Temasek’s move, Hana may have no option but to drop the M&A deal.
“It is not impossible, but it is a very difficult deal for Hana to merge with Woori,” Lee Byeong-keon, an analyst from Dongbu Securities, said.
“Goldman Sachs is also likely to sell its stake if Hana’s stock price goes up. For Hana, it won’t be easy to calm other investors who were surprised by Temasek’s sale.”
Meanwhile, KDIC plans to begin the process of selling its controlling stake in Woori Finance.
KDIC will invite prospective buyers to submit bids for its stake after obtaining final government approval, according to the Public Fund Oversight Committee.
The move comes after a trio of underwriters ― Samsung Securities, Daewoo Securities and JP Morgan ― completed an over one-month-long due diligence of Woori Financial last week.
The government plans to sell at least a 28.5 percent stake to one buyer with the final acquirer to be determined by the end of March in 2011.