Report: ANZ offers up to $4.6bn for KEB stake

The offer reportedly still falls short of would-be vendor Lone Star's expectations.

US-based Lone Star Funds has resumed talks with the Australia and New Zealand Banking Group (ANZ) to sell its 51 percent holding in Korean Exchange Bank (KEB), according to media reports.

None of the parties involved could be reached for comment by press time.

ANZ, which along with Standard Chartered Bank and MBK Partners, had been named earlier this year as a potential bidder on the asset, had subsequently been said to have dropped out of the running as it was only prepared to offer up to $3.3 billion.

However, following a period of due diligence, ANZ has offered between $4.5 billion and $4.6 billion for the Lone Star's stake plus the 6 percent owned by Export Import Bank of Korea, which is also for sale, according to a Reuters report citing anonymous sources.
The report stated that there remains a significant gap between Lone Star's asking price of more than $5 billion for the Korean asset and ANZ's current offer. The Australian bank is currently the only known suitor for KEB. 

A complete divestment would mark the closing of a seven-year long saga for Lone Star, which has been marred by controversy. In 2003, Lone Star was accused by the South Korean government of colluding with KEB management to exaggerate the bank’s financial distress at the time of its purchase, allegedly allowing Lone Star to acquire its stake in the Korean bank at significant discount.

The firm was also accused of manipulating the share price of the bank’s credit card division, which it acquired after its purchase of the holding in the bank.

The ensuing five years saw both Lone Star and KEB fined $26 million for misconduct and Lone Star’s country head for Korea, Paul Yoo, sentenced to five years in prison. The firm was finally cleared of all wrongdoing in November 2008, but the legal wrangling had by then hampered Lone Star’s first two attempts to divest its stake in KEB.

This year has seen Lone Star begin several lines of negotiation in an attempt to finally exit its controlling stake in KEB. Most recently reports named North Asian-focused private equity firm MBK Partners as the lone bidder to have submitted a letter of intent to the firm. It is not known whether MBK is still interested in the deal.