Lone Star halts $4bln KEB stake divestment

Paper reported Lone Star decided to suspend sale because of huge price gap with potential buyers.

S. private equity firm Lone Star [LS.UL] has decided to scrap its plan to sell a majority stake in Korea Exchange Bank worth $4 billion at current market price because of weak demand from potential investors, a local paper said.

The decision, if confirmed, would be Lone Star's third failure to sell KEB since buying into the bank in 2003, and also comes as Australia and New Zealand Banking Group Ltd was preparing due diligence on KEB to decide on a bid by mid-October.

KEB had no official comment and Lone Star was not immediately available for comment.

Credit Suisse Group AG, which advises Lone Star, declined to comment.

"Lone Star told financial investors in the United States, Hong Kong and Europe that it would suspend the sale of KEB indefinitely," the Seoul Economic Daily quoted an unnamed private equity source close to the deal as saying.

The report said Lone Star had decided to halt the sale because of the huge price gap with potential buyers and concern that property-related financing may turn sour and reduce the appeal of Korean banks in general.

View the full story in Reuters.

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