Shares of Lehman Bros. Holdings Inc. (LEH) deflated yesterday (Monday) after hopes of a bailout bid from a Korean bank dissipated.

Jun Kwang Woo, chairmen of the Korean government’s Financial Services Commission, expressed concern about an investment from state-controlled Korea Development Bank in the struggling investment bank.

When questioned about a potential Lehman Bros. buyout, Reuters reported that Jun told reporters, “That would be an international marriage. Would you get married just after one or two blind dates?”

Jun went on to say that KDB should play a “cheerleader role” and allow private financial firms to take the lead in any cross-border investments. He said that a purchase of Lehman Bros. by KDB would be “improper.”

News of Jun’s comments sent Lehman shares plunging, reversing Friday’s gains after rumors of KDB’s interest in a possible investment were first reported.

Lehman stock dropped 6.4% with a decline of 92 cents to close at $13.49 yesterday, well off the stock’s 52-week high of $67.73.

With such strong opposition to a Lehman/KDB deal coming from a top-ranking government official, the odds of a buyout have decreased dramatically.

“The probability of KDB seeking to be a major shareholder of Lehman is less than 1%,” Park Kyung Min, chief executive at fund manager Hangaram Investment Management, told BusinessWeek.

And that’s bad news for Lehman Bros. Chief Executive Officer Richard Fuld, who has been struggling to find a last-minute savior to pump needed liquidity into the battered investment bank.

Lehman Bros. stock has lost 79% year-to-date, bringing the fourth largest Wall Street investment bank’s market-capitalization below $9.4 billion. This new valuation makes Lehman a viable hostile takeover target for an international financial firm looking to expand their U.S. footprint.

If Fuld can’t come through with a plan to restore investor confidence soon, Lehman Bros. could find itself going the way of The Bear Stearns Cos. Inc., now a part of JPMorgan Chase & Co. (JPM), purchased for what was once an unthinkable price of just $10 per share.

Source: Korea’s Government Nixes Possible Lehman Bros. Bid