British bank HSBC Holdings PLC said Friday it has canceled an agreement to purchase a controlling stake in a South Korean bank from U.S. private equity group Lone Star Funds amid world financial turmoil.
HSBC said in a statement that it "exercised its right to terminate the acquisition agreement with immediate effect." The London-based bank cited "all relevant factors including current asset values in world financial markets" for the decision. It gave Thursday as the date of the cancellation.
"Discussions with Lone Star have not led to agreement on how the transaction might proceed on a basis acceptable to HSBC," the bank said.
South Korea's financial regulator, which was reviewing the proposed acquisition by HSBC, had recently suggested it was likely to be approved. Global financial turmoil this week, however, appears to have played a major role in scuttling the deal.
"In the light of developments around the world, not least changes in asset values in world markets, we do not believe that it would be in the best interests of shareholders to continue to pursue this acquisition on the terms negotiated last year," Sandy Flockhart, chief executive officer of HSBC Asia and an executive director of HSBC, said in the statement.
HSBC had contracted to buy Lone Star's controlling stake in KEB, South Korea's sixth-largest lender, for about $6 billion.
The Financial Services Commission, the regulator, expressed disappointment. "It is regrettable that HSBC unilaterally canceled the contract during the review process despite active efforts by the FSC," the regulator said in a statement.
Lone Star Chairman John Grayken confirmed HSBC's decision.
"We are disappointed that HSBC terminated the agreement and that the transaction will not be completed," he said in a statement.
"After Bear Stearns and portions of Lehman Brothers Holdings sold at fire sale prices this year, banking assets now seem cheap, while KEB looks to be pricey."
"With plenty of other attractive takeover targets available in the market, the executives of HSBC may have had trouble persuading shareholders of the need to hold on to the KEB deal,” said Peter Sangbin Park, a Seoul-based analyst for Daishin Securities. In other words, there are now plenty of other big fish in the pond for HSBC to target.
匯豐於去年9月宣布, 以高達63.17億美元的價錢向美國私募基金Lone Star購入韓國外換銀行(KEB)51%的股權, 但是韓國金融委員會就諸多阻攔, 遲遲都唔批準. 當時匯豐對KEB的估值是每股18,045 won , 現時KEB的每股市價大約11,750 won (相信如果無匯豐收購的消息支持, 市價應該會更低), 加上現時有財力的金融集團買少見少, cash is the king, 但等待,渴望或需要被注資或收購的金融集團就有不少, Lone Star不肯減價至匯豐滿意的價錢, 匯豐取消交易好合理. 市場上仍然有其他更好味更平的目標可以選擇, 現時的市況係買家話事, 匯豐當然要好好利用本身雄厚資本的優勢.