KfW said Lone Star would pay a sum in the low "three-digit millions" for its 91% IKB stake and assume €3.3 billion ($4.9 billion) of the target's questionable loans. KfW will take on the remaining €1.3 billion of the bank's shaky portfolio.
In addition, KfW said it would be willing to pump an additional €720 million into the bank if additional investments fail.
KB stockholders welcomed the announcement with the shares trading 8.2%, or €0.22, higher in afternoon trade at €2.90. Just a year ago, the shares traded at €15.
KfW expects the deal to close in October. - Andrew Bulkeley in Berlin
Dealscape: Lone Star to buy IKB (subscription required)