HSBC gets more time to acquire Lone Star stake in Korea Exchange Bank

HSBC Holdings plc and Lone Star Funds have extended an agreement on $6 billion acquisition of Korea Exchange Bank, the sixth largest bank in Korea, until 31 July 2008.

London-based HSBC proposes to acquire 51.02 per cent of Korea Exchange Bank, subject to regulatory approval. (See: Lone Star to sell 51-per cent stake in Korean Exchange Bank to HSBC for $6.3 billion)

The acquisition is being made through HSBC Asia Pacific Holdings (UK) Limited (HSBC Asia), its wholly owned  subsidiary.  On 3 September 2007, HSBC Asia had entered into a conditional agreement to acquire 51.02 per cent of the issued share capital of KEB from LSF-KEB Holdings SCA (Lone Star).

The parties have now agreed to extend the deadline for completion of this transaction from 30 April to 31 July 2008.  Both parties have also agreed that if the Korea Financial Services Commission (FSC) approves the deal during the duration of this agreement, the deadline for completing the acquisition will be extended by two months after the date of FSC approval.

The acquisition provides that either HSBC Asia or Lone Star may terminate the acquisition agreement if completion has not occurred on or before the deadline. HSBC Asia and Lone Star also reserve the right to terminate the agreement by giving notice between 1-7 July 2008, in case the FSC fails to grand approval by then.

"This is a particularly exciting time for Korea, Asia's third largest economy, especially given the government's stated desire to create a truly global market, building on its already strong economic links to China, Japan, the EU and the US. The proposed transaction is entirely in line with our stated strategy to focus on high growth economies and I continue to be of the view that it is in the best interest of all KEB stakeholders and of HSBC," Stephen Green, group chairman, HSBC Holdings plc, said.