KDB Backs Away From Lehman Brothers
As rumors go, this one did not have much longevity....and the Lehman's (LEH-NYSE) stock sold off late in the day Friday, in case you took your eye off of the ball.
Yes, the Korean's appear to be taking a raincheck, according the the Wall Street Journal:
Reuters reported Friday morning that Korea Development Bank, which has flirted in the past with buying a stake in Lehman, is "open to all possibilities, which could include [buying] Lehman," according to a KDB spokesman. KDB is the fifth-largest bank in South Korea, with assets of about $120 billion.
KDB later played down the likelihood that it is ready to swoop in on Lehman. "We are just at an early stage of privatization, and we are weak at investment banking by international standards," bank spokesman Sung Joo-yung said in an interview with The Wall Street Journal. "In the long term, we should strengthen that weakness." WSJ
Perhaps Friday's enthusiasm was the work of an overeager reporter looking to scoop his competitors, but the Korean bank appears to have its plate full as it approaches an eventual privatization.
A Lehman alum was recently appointed chairman of the Korean bank, but Dick Fuld is likely to remain Supreme Ruler of Lehman for the time being given he is valuing the company about 25 points higher than where his stock is trading. And selling a deal to Korean regulators could prove to be difficult, despite some obvious ties to New York:
KDB’s new chairman, Min Euoo-song, is a former chief of Lehman’s Seoul branch and has a reputation in Korean banking as an aggressive deal maker. But to make a takeover or sizable investment in Lehman work, Mr. Min would have to persuade South Korean regulators that Lehman fits with the government’s plan to privatize KDB.
In June, the government laid out specifics for splitting KDB into a holding company, which would become privatized by 2012, plus a separate development fund that would remain in government hands. Despite those plans, South Korean regulatory agencies are filled with people who lived through the financial crisis that drove the country to the edge of bankruptcy a decade ago. That is likely to make them especially cautious about any deal with Lehman.
This story could make good copy heading into one of the slowest weeks of the year; with perfect weather forecast for the East Coast this week, attendance in the CIty could be light. The B-team’s manning the trading desks will have to vet the Lehman rumor mill for a few days as the A-Team’s huddle in the Hamptons goofing off.
Of course, the Korean’s might be playing opossum; time will tell. Dick Fuld’s best shot at lining his pockets remain offshore, somehow I don’t see him taking Steve Schwarzman to the cleaners on this deal.
Your move, Mr. Fuld.
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Nasty little sell-off in the last half hour Friday...
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KDB Plays Down Interest in Lehman
WSJ
Saturday
ASIAN INFLUENCE-A
New York Post
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