Korea Zinc Co. has intensified its share buyback efforts as the competition for control over the world’s leading zinc smelter heats up. On Friday, a special purpose entity led by Chairman Choi Yun-beom announced a 7.2% increase in its bid, raising the offer to 890,000 won ($659) per share. This new price surpasses a competing offer of 830,000 won from MBK Partners and Young Poong Corp., the primary shareholder in Korea Zinc, which is set to expire on Monday. MBK and Young Poong have indicated that they will not adjust their offer.
Following this announcement, Korea Zinc’s stock exhibited volatility, oscillating between gains and losses. As of 12:09 p.m. in Seoul, shares were up 0.3% at 791,000 won, significantly below both competing offers, reflecting market skepticism about the likelihood of a deal under the current terms.
This latest development marks another chapter in the ongoing saga surrounding Korea Zinc, a key player in the global metals market with a history spanning over 50 years. Chairman Choi, a descendant of the company’s founder, is at odds with Young Poong, which is controlled by a rival family faction. The two sides have clashed over the future direction of the company and its role in the energy transition for several months.
In response to Choi’s increased tender price, MBK expressed concerns that this move could negatively impact the firm and exacerbate its debt challenges. The company is exploring all avenues to prevent “irreversible damage” to Korea Zinc, including pursuing its ongoing legal action.
While South Korean conglomerates frequently encounter succession disputes, it is uncommon for private equity firms to be involved. MBK, one of North Asia’s largest buyout firms, made a surprising joint offer with Young Poong in mid-September, aiming to enhance corporate governance at Korea Zinc. Earlier this month, Chairman Choi enlisted Bain Capital’s support for the buyback initiative.
In a further escalation of the buyback strategy, Korea Zinc and Bain announced they would increase the share acquisition target from 18% to 20%, with the offer period extending until October 23.
This battle for control has attracted scrutiny from South Korea’s financial regulatory authority, which has described the situation as “overheated.” Financial Supervisory Service Governor Lee Bokhyun warned earlier this week that any unfair trading practices would be thoroughly investigated and dealt with accordingly.
Additionally, Korea Zinc raised its bid for Young Poong Precision Corp. by 17% to 35,000 won per share on Friday. Young Poong Precision holds a 1.85% stake in Korea Zinc, making it a pivotal player in this larger conflict. MBK also has a bid for this subsidiary, which is set to expire on Monday.
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