KB Financial Can't Afford To Buy Woori Finance - Chairman
April 24 2012 - 10:57PM
Dow Jones News
KB Financial Group (105560.SE), one of South Korea's four
largest financial holding firms by assets, cannot afford to buy its
bigger rival Woori Finance Holdings (053000.SE), KB Financial
Chairman Euh Yoon-dae said.
"It will cost us (around) KRW10 trillion ($8.77 billion) to buy
Woori. We don't have that much money available," Euh told a group
of reporters recently as confirmed by KB Financial.
The South Korean government is preparing to launch its third
attempt to privatize Woori Finance, the nation's largest financial
holding firm by assets. Seoul has recently reiterated that it is
open to merging Woori Finance with another financial company, which
may create a megabank.
KB Financial has been named in a recent local media report as
the most likely candidate in such a merger.
The government's second attempt to sell Woori fell apart last
year amid a lack of interested bidders.
Under Korean law, in the event of an acquisition involving
financial holding firms, an acquiring firm has to buy at least 95%
of its target. In Woori Finance's case, a 95% stake is valued at
slightly less than KRW10 trillion based on its Tuesday closing
share price, a price that analysts say is deemed as too expensive
for potential bidders among the local financial holding firms.
Market watchers say the context of Euh's comment could be KB
Financial's planned bid for ING Groep N.V. (ING)'s life insurance
operations in South Korea. Given that the estimated value of ING's
Korean insurance unit is around KRW4 trillion, KB Financial
wouldn't have the wherewithal to consider an acquisition of
Woori.
-By Kanga Kong, Dow Jones Newswires; 822-3700-1900;
kanga.kong@dowjones.com
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