Hana Financial Group Inc. (086790) climbed after South Korean regulators ordered Lone Star Funds to sell its Korea Exchange Bank stake, bringing Hana closer to completing its year-old purchase agreement for the bank.
Hana jumped 4.5 percent, the most in more than a month, to 37,200 won at the close of trading in Seoul. Korea Exchange Bank fell 0.6 percent. The country’s benchmark Kospi index fell 1 percent.
Lone Star on Nov. 18 was ordered to sell at least a 41 percent stake, after being convicted of stock-price manipulation by a Seoul court last month. The ruling allows the Dallas-based fund to proceed with the proposed 4.4 trillion won ($3.9 billion) sale to Seoul-based Hana in what would be South Korea’s biggest banking takeover.
“While some uncertainty still remains, it’s now more possible for Hana to buy Korea Exchange Bank (004940), and that’s boosting the share price,” said Seo Young Soo, a Seoul-based analyst at Kiwoom Securities Co.
Hana may negotiate a lower price for the purchase of Lone Star’s 51 percent Korea Exchange stake, Chairman Kim Seung Yu said after the Financial Services Commission’s announcement on Nov. 18. A public backlash over Lone Star’s profits from the investment has put pressure on Hana to renegotiate, Kim said in an interview.
Shares of Hana have fallen 18 percent this year before today’s share gains and Korea Exchange has plunged 33 percent, compared with the Kospi’s 10 percent drop.
Kim said he aims to complete the purchase by the end of the month. The two sides had agreed in July to extend the deadline for the stake sale to Nov. 30 and cut the price by 6 percent. Hana President Kim Jong Yeol told investors on Oct. 21 that the company plans to seek a lower price.
Hana may be able to achieve a small discount if the deal is renegotiated, Kiwoom’s Seo said.
The FSC will ask Hana to resubmit its documents to win approval for the acquisition, according to a Nov. 18 statement from the financial regulator. Lone Star isn’t qualified to own more than 10 percent of a Korean bank after its conviction and must sell the stake by May 18, the regulator said.
Lee Jung Dae, a spokesman for Hana Financial, and Lee Sun Hwan, a spokesman for Korea Exchange Bank, weren’t immediately available for comment. Both are based based in Seoul.
Ernst Lee, a spokesman for the Financial Services Commission, said the regulator isn’t aware of any discussions between Lone Star and banks other than Hana.