South Korean M&A Can Be Costly

Buying Korea Exchange Bank resulted in five years of legal tangle for buyout firm Lone Star.

What does it cost to do deals in South Korea? For Lone Star Funds, a Dallas-based buyout firm, almost $3 billion.

Lone Star, which won control of Korea Exchange Bank in 2003 when no local lenders were interested, spent more than five years entangled by courts, regulators and lawmakers as the fund incited public backlash over the profits on its investment. After it was convicted of stock manipulation and two attempts to cash out were undone by legal disputes, Lone Star agreed this month to sell its majority stake to Hana Financial Group Inc. for $3.4 billion, an almost 50 percent discount to HSBC Holdings Plc’s offer in 2007, according to data compiled by Bloomberg.

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