Bloomberg News

Hana Advances on Speculation KEB Takeover May Accelerate

October 12, 2011

(Updates with Yoo’s appeal in seventh paragraph.)

Oct. 13 (Bloomberg) -- Hana Financial Group Inc. rose to a two-month high in Seoul trading on speculation that its planned $3.8 billion purchase of Korea Exchange Bank from Lone Star Funds may progress as court proceedings draw to a close.

Hana traded 3.5 percent higher at 37,500 won as of 10:53 a.m. local time after earlier jumping as much as 7.6 percent to 39,000 won, the highest since Aug. 4. That compared with the Kospi index’s 1.1 percent gain.

Dallas-based Lone Star has until the end of today to appeal to Korea’s highest court against an Oct. 6 conviction for stock- price manipulation. The buyout fund may not file an appeal as prolonging the case would postpone its exit from the Korea Exchange Bank investment, said Hong Hun Pio, an analyst at KTB Investment & Securities Co.

“Investors seem to be betting that Lone Star won’t file an appeal by today’s deadline, which would close the legal dispute,” Hong said. “At this point, the best thing for Lone Star is to get the deal done with Hana.”

The Financial Services Commission said on Oct. 6 that it may order Lone Star to sell most of its stake in Korea Exchange Bank if the conviction stands. The regulator said in May that it won’t approve Hana’s proposed takeover until Lone Star’s legal disputes are resolved. That prompted Hana and Lone Star to extend the deal deadline to Nov. 30 and cut the purchase price by 6 percent to 4.4 trillion won ($3.8 billion).

The Seoul Economic Daily reported earlier today that Lone Star has decided not to appeal, citing a person it didn’t identify. Jed Repko, a spokesman for Lone Star, declined to comment on whether the fund will file an appeal in an e-mailed response to questions.

The Seoul High Court fined Lone Star 25 billion won for its part in the stock-price manipulation case and sentenced its former local chief, Paul Yoo, to three years in prison. Yoo appealed against his conviction on Oct. 10.

--Editors: Russell Ward, Chitra Somayaji

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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