HSBC Ready to Update KEB Bid Application
HSBC said on Monday it was ready to submit an updated application to South Korean authorities on its bid for Korea Exchange Bank (KEB) but declined comment on a local media report that it was negotiating to cut the purchase price.
Yonhap new agency cited financial authorities and industry sources as saying Europe's biggest bank was trying to lower the $6.3 billion price tag to reflect a weaker KEB share price, which would delay any announcement to keep the deal afloat.
"I'm convinced that the Korean government is doing everything it can to progress this transaction," HSBC Korea spokeswoman quote the bank's local chief Simon Cooper as saying. We will submit a revised application to FSC (Financial Services Commission) as soon as practicable."
HSBC Holdings agreed to buy a 51 percent stake in the South Korean bank from U.S. private equity firm Lone Star last September on conditions that they would receive regulatory clearance. But a July 31 deadline for HSBC's offer had passed without necessary approval.
Under the original agreement, HSBC was supposed to pay 18,045 won or $19.20 per share, according to HSBC's conversion rate -- a 23 percent-plus premium to KEB's Sept. 3 closing price.
KEB shares are trading 3.1 percent lower at 12,650 in the Asian session, down about 13 percent from the price when the deal was announced.
"My knowledge is that HSBC board could not decide whether to extend the deal because the price renegotiation has not finished," Yonhap quoted an unnamed government official as saying. "If the negotiation is not completed by Aug. 4 when it is set to release earnings, HSBC may not be able to announce an extension," the official added.
Both HSBC and Lone Star declined comment on the report.
On Sunday, the UK-based bank said that neither HSBC Asia nor Lone Star had terminated the agreement, and both parties were discussing the next step.
"There are a number of things under discussion," HSBC spokesman David Hall in Hong Kong said on Monday. But he declined to give specifics, when asked whether HSBC intended to renegotiate the acquisition price.
Last week KEB has played down the possibility of HSBC cutting its acquisition price, saying its corporate value has been improving.