ANZ quits bidding for Korean Exchange Bank takeover

Move brought relief to ANZ’s investors, who were nervous about the capital needed to fund the acquisition.

Investors greeted with relief the decision by ANZ Bank on Thursday to pull out of a potential bidding war for the Korean Exchange Bank (KEB) after it removed the prospect of a $1.5 billion-plus equity raising by the Australian group.

ANZ's shares gained almost 1 per cent to close at $22.47, up 19 cents, following news that a Korean financial services group, Hana, had agreed to buy a majority stake in KEB for about $4 billion.

ANZ had been conducting due diligence on KEB after flagging its interest several months ago in the shareholding put up for sale by the US private equity operator Lone Star Funds.

The bank had been considered as being in the box seat to pick up the 51 per cent investment in recent weeks following the decision by other potential bidders to withdraw from the auction.

But ANZ's plans to add KEB to its burgeoning Asian regional banking business were upset over the past fortnight by Hana, which pitched a late-running offer that put a premium of between 15 per cent and 18 per cent on the bank's current market capitalisation.

The likelihood that ANZ could have paid over the odds or become involved in a dutch auction had hung over its shares; investors were nervous about the size of the capital raising that would be needed to fund the acquisition.

View the full story in The Sydney Morning Herald.