Kookmin Bank has been selected as the preferred bidder to take over a controlling stake in Korea Exchange Bank (KEB) for more than 6.4 trillion won, Kookmin Bank and Dallas-based Lone Star Funds announced on March 23. Lone Star said it has signed a letter of intent to sell its stake in KEB to Kookmin. The two parties will start negotiations over the terms of the sale. Kookmin is bidding for Lone Star's whole 50.5 percent stake and a 14.09 percent stake held by the Export-Import Bank of Korea and Germany's Commerzbank, the second and third largest shareholders in KEB. Kookmin offered to buy KEB shares for 15,400 won per share, totaling 6.42 trillion won for the 64.6 percent stake, but the price can change before negotiations finish, Kookmin said. Meanwhile, Kookmin President Kang Chung-won said the bank is considering forming a consortium with domestic and foreign investors to share the costs. If the merger between Kookmin and KEB is made, it will create a bank with some 270 trillion won in assets, making it one of the world's 60 largest financial institutions and one of the top 10 Asian banks. The deal still requires regulatory approval, which is expected to focus on checking whether the merger violates the country's anti-trust rules. Kookmin's bidding rivals have claimed an acquisition of KEB by Kookmin will hurt fair competition in the banking sector as the combination will increase Kookmin's market share to over 35 percent. If the deal is complete before July, Lone Star is expected to pay no taxes as it is based in Belgium, with which South Korea signed a double taxation avoidance agreement. New rules are set to go into effect from July 1 to impose taxes for companies and financial institutions based in foreign tax havens. Lone Star is expected to reap over 4 trillion won in capital gains from the deal. It bought KEB in 2003 for 1.3 trillion won.