Monday, September 3, 2007

HSBC buys KEB from Lone Star

HSBC announced their intention to acquire KEB on August 20th, and now Lone Star will quadruple their investment. HSBC is paying 1.2 billion more than the current market price for Lone Star's 51% stake or 6.3 billion, that they paid $1.4 billion for in 2003. If the Korean government gives it's approval, Lone Star makes $5 billion for its 4 year investment. Wouldn't you like to make those percentage returns? Maybe you need to reread this.

Lone Star had offered to buy LEND for $15.10; and you could buy all you wanted at less than 6 even after the deal was announced. Wall Street had no confidence in the deal, but I did: October of 2003, in the depths of the Korean crisis, they put $1.4 Billion for 50.5% of Korea Exchange Bank. It tripled. Now people are saying Lone Star undervalued the stake in the Korean bank when they bought it. So they know what they are doing, and they know what they are getting into.

Last Thursday, Lone Star offered to buy LEND for $8.50 a share with no conditions, after they tried to pull their $15.10 offer. LEND told them to take a hike, a deals a deal-pay us $15.10. They go to court September 26. After making $5 billion on KEB, another distressed situation, do you think a judge will have any sympathy on Lone Star? Accredited Lending, who Wall Street said had no cards, had pocket aces, and just drew another on the river.

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