South Korean bank tipped for $10b deal

SEOUL - South Korea's Kookmin Bank has been picked as preferred buyer for Korea Exchange Bank by US fund Lone Star, a source said yesterday, in a deal likely to be the biggest acquisition in the country.

The deal could be worth as much as about 6 trillion won ($10 billion) at current share prices, if a 70.9 per cent stake in KEB is sold. Analysts said the value could rise to as much as $11 billion with management premiums.

Shares in Kookmin, South Korea's top lender, jumped 4.7 per cent to a record high on the news while KEB rose as much as 1.2 per cent.

South Korea's Hana Financial Group and Singapore's DBS also submitted bids. A Lone Star spokeswoman in Seoul said no official decision had been made.

Dallas-based Lone Star, which aims to close the sale around the summer, looks set to more than quadruple the return from its US$1.2 billion ($1.93 billion) investment in KEB made just two-and-a-half years ago, marking the biggest return for a private equity fund from a single deal in South Korea.

A KEB sale would come a year after US-based buyout firm Newbridge Capital sold Korea First Bank to Standard Chartered for US$3.3 billion.

- REUTERS