Korea Zinc Co. has decided to abandon its planned $1.8 billion share sale, nearly two weeks after the announcement led to a sharp drop in stock prices and triggered an investigation by South Korea’s financial regulator. The world’s largest producer of refined zinc stated in a regulatory filing on Wednesday that it had taken into consideration feedback from market participants and investors in making the decision to retract the offer.
While the retreat was widely anticipated, it marks a setback for Chairman Choi Yun-beom’s efforts to bolster support among shareholders and employees. Under the original plan, a significant portion of the new shares—one-fifth of the total—was earmarked for employees and existing shareholders, a move intended to strengthen internal backing. The scrapping of the share sale could also delay Korea Zinc’s efforts to reduce its mounting debt.
In a separate statement, the company reiterated its commitment to safeguarding minority shareholders and enhancing corporate governance, including efforts to improve the independence of its board. However, no specific details were provided on how these goals would be achieved. A media briefing was scheduled for later Wednesday to address the situation further.
The decision to cancel the offering comes after the South Korean Financial Supervisory Service (FSS) intervened shortly after the original announcement. The FSS ordered Korea Zinc to revise its filing, citing insufficient details about the decision-making process and the due diligence on the party responsible for managing the share sale. The regulatory body also launched an investigation into potential misconduct related to the planned transaction.
The company has been embroiled in a high-stakes battle between its largest shareholders over strategic direction for months. Tensions escalated publicly in September when private equity firm MBK Partners, in collaboration with Korea Zinc’s largest shareholder, Young Poong Corp., made an unsolicited bid for the company. In response, a rival faction led by Chairman Choi and supported by private equity firm Bain Capital launched a share buyback program, which was completed before Choi unveiled the controversial plan to issue new shares at a steep discount—around 670,000 won each, nearly 57% below the stock’s previous record closing price.
Despite the sharp drop in share value following the announcement, Korea Zinc’s stock remains more than double its value from early September, when the takeover bid first emerged. The company’s market capitalization is still close to $17 billion, making it one of South Korea’s most valuable firms.
Following the news of the scrapped share sale, Korea Zinc shares experienced volatile trading, with prices dipping to intraday lows by midday local time. As a key player in the global metals market, Korea Zinc is central to efforts to diversify supply chains and reduce reliance on China, especially in the context of the ongoing energy transition.
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