K B Financial Group has decided to take over the ING Life Insurance Co. of Korea, a wholly-owned subsidiary of ING Life Insurance in Korea, for 2.45 trillion won, down 100 billion won from the originally agreed price, but the group has yet to persuade outside directors who oppose the takeover calling the price “too high.”

Highly-placed financial sources said the talks between ING Life and KB Financial have ended and the contract will be signed with the agreed price of 2.45 trillion won at any time now.

Officials of KB Financial said the agreed price comes to 0.8 times the P/EV ratio, less than 1 times the management rights premium, which is very cheap. They cited Hong Kong’s Pacific Century paying 1.8 times the management rights premium in buying ING Life’s subsidiaries in Hong Kong, Bangkok, and Macao, and Bogo Fund paying 1.08 times the management rights premium for its purchase of a 46.5 percent stake in Oriental Life in Korea, showing that KB Financial’s agreed price is much better.

KB Financial plans to issue bonds for the first time to secure funds to pay for the foreign life insurance firm in Korea, as the Financial Services Commission (FSC) objected to its initial plan to pay for the takeover with 1 trillion won from Kookmin Bank for its dividends for the sake of the health of the bank.

However, the key point in the deal remains to be the objections by some of the outside directors of the group. One director on the side of the deal is quoted as saying that the deal is good for the further development of the financial industry and the price is also good, since it has been cut as low as possible. 

The group will call for a board of directors meeting and seek approval for the deal and ask for the approval of the financial authorities. An official of the FSC said he doesn’t see any problem for the approval and it can be approved in 30 days without having go to through the usual preliminary process.

In the meantime, ING Life plans to sell its stake in KB Life Insurance, jointly set up with KB Financial at a ratio of 51 percent to 49 percent in favor of its partner. But ING Life would not sell its 5.02 percent stake in KB Financial for the time being because, as one of its officials said, the company obtained the stake for the purpose of diversifying its investment portfolio.

ING Life Korea is the fifth largest life insurer in Korea in terms of insurance premium earnings, which amount to 4.1 trillion won, and assets totaling 21 trillion won in 2011. KB Financial’s takeover of the life insurer would create a huge change in the Korean life insurance industry currently led by the big three°™Samsung, Hanwha, and Kyobo.