Australia's ANZ, MBK Are Said to Hold Off on Bids for Korea Exchange Bank
Australia & New Zealand Banking Group Ltd. and MBK Partners Ltd. didn’t submit bids for Korea Exchange Bank ahead of yesterday’s deadline, two people with knowledge of the matter said.
Korea Exchange Bank had sought binding offers by July 26, said the people, who asked not to be identified because the sale process is private. The Seoul-based bank, controlled by Lone Star Funds, will consider extending the deadline, one of the people said. ANZ and buyout firm MBK are the main contenders to acquire Lone Star’s 51 percent stake, they said.
ANZ and Seoul-based MBK are still trying to value Korea Exchange and are concerned about making binding bids amid intense competition in the Korean banking industry and other potential takeover targets, including Woori Finance Holdings Co., said the people. ANZ said in April it was mulling a bid for the stake, worth $3.4 billion based on today’s price.
“Given Korea Exchange isn’t a leading bank on measures including assets and market share, it doesn’t provide much of an advantage to foreign banks unless they’re desperate to secure a foothold in the Korean market,” said Hwang Seok Kyu, an analyst at Kyobo Securities Co. in Seoul.
Lone Star, the Dallas, Texas-based buyout fund controlled by John Grayken, has tried for four years to sell its holding in Korea Exchange as regulators examined the circumstances of its investment in the lender.
Paul Edwards, a spokesman for Melbourne-based ANZ, declined to comment, as did Kim Sun Gyu at Korea Exchange Bank. Michael Kim, who runs MBK, which manages about $3.7 billion in assets, declined to comment.
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Melbourne-based ANZ hasn’t yet decided whether they will proceed with a bid, while MBK, based in Seoul, is likely to make an offer this month, the people said.
“Looking at its current price-to-book value ratio, it’s a bit higher than its Korean peers,” Kyobo’s Hwang said of Korea Exchange. “I’m not sure who’d pay a premium for KEB.”
JPMorgan Chase & Co. cut its 12-month stock price estimate on Korea Exchange’s to 13,500 won from 18,500 won and cut rating to “neutral” from “overweight” in a report dated yesterday. Analysts Scott YH Seo and Jaehee Kim said the sale of Korea Exchange is “unlikely to be completed at least in the short term.”
The South Korean government will announce a plan for privatizing Woori Finance on July 30, which may lure potential bidders away from Korea Exchange, the JPMorgan analysts said.
To contact the reporter on this story: Cathy Chan in Hong Kong at kchan14@bloomberg.net
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