Shares of Korea Zinc Co. surged by as much as 10% on Monday after South Korea’s largest pension fund, the National Pension Service (NPS), announced its support for proposals put forward by CEO Yun B. Choi at the upcoming special shareholders meeting. NPS confirmed it would vote in favor of the cumulative voting system and a proposal to limit the board size to 19 members during the extraordinary meeting on January 23.
The special meeting has been called by private equity firm MBK Partners and Korea Zinc’s largest shareholder, Young Poong Corp., who are vying for control of the company following an unsolicited bid in mid-September. The duo now controls 41% of Korea Zinc, while Choi’s faction holds 35%, making the outcome of the proxy battle dependent on other investors.
NPS, which owned a 4.51% stake in the company as of late October, will back the election of three directors nominated by both Korea Zinc and the MBK-Young Poong alliance.
This battle for control of the world’s largest zinc smelter has seen Choi clash with the MBK-Young Poong group, who accuse him of mismanagement, excessive debt accumulation, and ignoring the interests of minority shareholders. Choi has rejected the takeover attempt, calling it “predatory M&A,” and has enlisted private equity firm Bain Capital to announce a share buyback program.
The proxy battle comes after both sides failed to reach a consensus despite multiple attempts to outbid one another. Institutional Shareholder Services, a leading proxy advisor, has recommended voting against all seven directors proposed by Korea Zinc and the cumulative voting system, arguing that while cumulative voting typically benefits minority shareholders, it could serve as a tool for Choi to maintain control. In contrast, Glass Lewis has endorsed the new voting system and some of Korea Zinc’s nominated candidates.
Following the NPS announcement, Korea Zinc shares rose as much as 10% to 927,000 won before stabilizing at around a 7% gain as of 9:48 a.m. local time.
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