By Kim Jae-won
Australia & New Zealand Banking Group (ANZ) is set to go ahead with a deal to buy a controlling stake of the Korea Exchange Bank (KEB), a source said Sunday.
“ANZ is set to go,” the source said. “It is using its advantage as a lone bidder to drive down the price.”
“Lone Star has no choice but to sell its stake of KEB to ANZ,” the source said.
The Dallas-based private equity fund Lone Star, the owner of the controlling stake, has set the deadline for its sale by the end of the year, thereby giving ANZ the upper hand on the key issue of price.
Lone Star wants to get more than 4 trillion won for its stake and a “premium” for the management control, according to some reports. ANZ wants to keep it below 4 trillion.
Another source said that ANZ is not suggesting much premium for the KEB deal, explaining the gap between the prices on either side.
ANZ is winding down its due diligence that has now stretched to one and half months.
Without confirming whether there is a deal in the making, industry watchers say that ANZ will submit their suggested price after conducting due diligence, with the endorsement of its board. “If everything goes as scheduled, there could be an announcement by the end of October,” one official said. The end-of-October means that any deal can be free from much scrutiny by the National Assembly, where the ongoing audit will be brought to a close by then.
Unconfirmed reports say that ANZ has offered 3 trillion won while Lone Star wants to sell KEB for 5 trillion won.
Lone Star has been KEB’s major shareholder since 2003 when the U.S.-based private equity fund bought a 51 percent stake from the Korean government for 2.15 trillion won.
The Dallas-based fund tried to sell the stake to Kookmin Bank and HSBC but failed both times.
On both occasions, unfavorable public opinion played the role of deal spoiler, with politicians whipping up anti-foreign investor sentiment as Lone Star reaped high profits many times its investment.
Meanwhile, another source, who is aware of the situation, said that as far as he is concerned, no deal is close, but without ruling out the possibility of direct contact between the major shareholders of the two firms. “I have not heard of any immediate breakthrough,” he said.