Korean Development Bank In Hunt For Lehman Brothers
SEOUL, South Korea — State-owned Korea Development Bank has made a proposal to acquire 25 percent of U.S. investment bank Lehman Brothers for as much as 6 trillion won ($5.3 billion), a newspaper reported Wednesday.
The Chosun Ilbo, South Korea's largest mass-circulation daily, reported that KDB said in the proposal that it would buy the stake by forming a consortium with other South Korean banks and is awaiting a response from Lehman.
The paper quoted a financial source it did not identify. KDB, which was South Korea's sixth-largest bank by assets as of the end of last year, said it had no comment on the report.
The report came a day after KDB said that it was in talks with Lehman for a possible acquisition, confirming weeks of speculation over its intentions amid expectations the venerable Wall Street institution is in dire need of a capital injection.
KDB Governor Min Euoo-sung told reporters Tuesday that the talks had hit a snag over price, saying "we have not been able to narrow differences with the Lehman side."
A spokesman for Lehman Brothers Holdings Inc., the fourth-largest U.S. investment bank, declined to comment on Min's remarks.
Min, who was CEO of Lehman Brothers' South Korean operations until taking the helm of KDB earlier this year, also said KDB was trying to establish a consortium with private banks for the acquisition.
He did not indicate how much of a stake in Lehman the banks were seeking to obtain or if the private banks were South Korean.
The Chosun Ilbo said that South Korea's Woori Financial Group and Shinhan Financial Group were strongly considering joining in the acquisition with KDB.
Woori spokesman Hong Seung-hyun said Wednesday that it had received no offer from KDB to join a consortium. A spokesman for Shinhan also said it has no intention to participate.
Spokesmen for other major South Korean banks Kookmin Bank and Hana Bank said Tuesday they had no plans to invest in Lehman.
The Chosun Ilbo report said that the proposal called for paying between 5 trillion won ($4.3 billion) to 6 trillion won ($5.3 billion) for a 25 percent stake, though it could be expanded later to as much as between 40 percent to just under 50 percent.
Lehman has said that it wants to maintain its current management lineup following any acquisition, according to the report.
Any deal would require South Korean regulatory approval.
The Chosun Ilbo said that KDB's competitors include three large U.S. hedge funds, which it did not identify, British bank HSBC and an unidentified Chinese bank.
A report over the weekend in Britain's Sunday Telegraph identified China's CITIC Securities or sovereign wealth funds from Abu Dhabi and Qatar as also being alternatives to the Koreans.
Speculation has been rampant in recent weeks that Lehman Brothers Holdings Inc. could try and reach a deal for a capital injection.
Analysts project that Lehman, considered to be the most vulnerable to the credit crisis, could post losses of up to $4 billion when it reports third-quarter results in mid-September. It is expected that the investment bank will also announce a deal to raise fresh capital to help offset the losses.
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Associated Press Writers Jae-soon Chang and Jae-hyun Jeong contributed to this report.
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KELLY OLSEN | September 2, 2008 11:46 PM EST |
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