Bloomberg News

Hana Financial Rises Ahead of Court’s Verdict on Lone Star

October 05, 2011

(Updates with analyst comment in fourth paragraph.)

Oct. 6 (Bloomberg) -- Hana Financial Group Inc., South Korea’s fourth-largest financial group, rose in Seoul on speculation that its Korea Exchange Bank takeover may be completed soon, following a court verdict scheduled for today.

Seoul-based Hana, whose purchase of Korea Exchange Bank from Lone Star Funds has been pending since November due to a legal dispute, jumped as much as 8.1 percent to 36,200 won and traded at 36,100 won as of 10:17 a.m. The benchmark Kospi index climbed 3.9 percent and Korea Exchange Bank added 2.8 percent.

The Seoul High Court will deliver a verdict in the stock manipulation retrial of Korea Exchange Bank and Paul Yoo, Lone Star’s former local unit head, at 2 p.m. today. The Financial Services Commission has left the deal in limbo for almost a year because of the litigation, prompting Hana and Lone Star to extend a deadline for the deal to Nov. 30 from May and trim the purchase price by 6 percent to 4.4 trillion won ($3.7 billion).

“The end of this court case will remove legal uncertainty for Hana’s takeover of Korea Exchange Bank,” said Lee Chang Wook, an analyst at Seoul-based Taurus Investment & Securities Co. “Regulatory approval will be the only thing pending and some investors seem to betting that Hana will get the final go- ahead before the deal’s deadline.”

Before today, Hana shares had declined 25 percent since May 12, when the FSC said it wouldn’t approve its proposed acquisition of Korea Exchange until Lone Star’s legal dispute was resolved. The trial began on June 16 after the Supreme Court asked the lower court to reconsider whether stock trading rules were broken.

FSC Chairman Kim Seok Dong on Sept. 29 said that the regulator will make its decision on whether to approve Hana’s acquisition following the court’s ruling.

--Editor: James Gunsalus, Linus Chua

To contact the reporter on this story: Seonjin Cha in Seoul at scha2@bloomberg.net

To contact the editor responsible for this story: Chitra Somayaji at csomayaji@bloomberg.net


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