Mirae Asset wins U.S. lawsuit against China's Anbang on scrapped $5.8 bln hotel deal (updated)

Mirae Asset Securities

01/12/2020 08:48

(Changes sourcing, adds details, analyst comment)
    By Joyce Lee
    SEOUL, Dec 1 (Reuters) - South Korean investment bank Mirae
Asset Daewoo Co Ltd  006800.KS  and affiliates won a U.S. court
case against Anbang Insurance Group, a court document showed,
after Mirae scrapped a $5.8 billion deal after the start of the
pandemic to buy 15 U.S. hotels from Anbang. 
    The case in Delaware, where many companies are registered,
could set a precedent for deals that have seen valuations drop
since the COVID-19 pandemic, as buyers no longer want to buy
assets under the terms of agreements reached before. 
    A consortium led by Mirae agreed last year to buy the hotels
from Anbang, which had been selling some of its overseas assets
after the Chinese government took control of the troubled
insurer in 2018.  urn:newsml:reuters.com:*:nL4N2CM0S0
    But Mirae did not close the deal on the scheduled April 2020
date, saying that Anbang's representations and warranties were
inaccurate and failed to satisfy conditions, which led Anbang to
file the suit saying Mirae must fulfil its promised payment, the
court document showed. 
    The Delaware Court of Chancery, presided by Vice Chancellor
Travis Laster, found that the Anbang company that owns the
hotels made extensive changes to its business because of
COVID-19, such as employee layoffs, furloughs and closing
amenities. 
    This led to a failure to meet a condition that business be
"conducted in the ordinary course of business" and allowed Mirae
to terminate the agreement, the court document said. 
    Mirae said in a regulatory filing on Tuesday that depending
on whether the plaintiff appeals, it will respond through its
legal representative.
    Anbang has been liquidated and some of its assets have been
placed in a new entity called Dajia Insurance Group. A Dajia
official did not have an immediate response.  urn:newsml:reuters.com:*:nL4N2GB344
    Shares in Mirae Asset closed up 6.5% in Seoul on Tuesday.
    "Mirae won because Anbang did not meet conditions, but it
had wanted to get out of the deal because investors weren't
gathering," said an analyst, who declined to be identified to
protect business relationships. 
    "The decision does remove short-term risk, although it may
have unforeseen adverse effects should Mirae want to do deals in
China."

 (Reporting by Joyce Lee; Additional reporting by Cheng Leng in
Beijing; Editing by Lincoln Feast and Barbara Lewis.)
 ((jungyoon.lee@tr.com; +82 2 6936 1467;))