Tender offer enflames nasty management feud at Korea Zinc

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Tender offer enflames nasty management feud at Korea Zinc

Published: 18 Sep. 2024, 18:45

SHIN HA-NEE
shin.hanee@joongang.co.kr

Korea Zinc Chairman Choi Yun-beom speaks during a groundbreaking ceremony for the company's nickel smelter in Ulsan in November last year. [YONHAP]

The management control feud between two founding families of Korea Zinc, the world's largest refined zinc supplier, has sharply escalated as its largest shareholder, Youngpoong Corporation, partnered with a private equity firm to launch a tender offer.

On Friday, Youngpoong, which owns a 25.4 percent stake in Korea Zinc, said that it seeks to acquire up to an additional 14.61 percent stake in the zinc smelter through a special purpose company named Korea Corporate Investment Holdings jointly established with MBK Partners, a Seoul-based private equity firm.

The tender offer aims to acquire between 6.98 percent and 14.61 percent of Korea Zinc shares, with Youngpoong aiming to secure 0.02 to 0.05 percent and MBK 6.96 to 14.56 percent.

The price was set at 660,000 won ($500) per share, about 18.7 percent higher than the closing price of 556,000 won on Thursday. However, the announcement drove the share price to close at a new 52-week high of 666,000 won on Friday, up 19.78 percent, after surging to a record of 690,000 won mid-trading that day.

This is the latest development in the ongoing management dispute between Korea Zinc and Youngpoong, which emerged after incumbent Chairman Choi Yun-beom took office in 2022 and began actively seeking partnerships with third parties such as Hyundai Motor Group to expand the firm’s portfolio into EV materials.

Youngpoong, the leading non-ferrous metal supplier, was co-founded by the late Chang Byung-hee and the late Choi Ki-ho in 1949, and Korea Zinc, its sister company, was founded in 1974. The Chang family has been at the helm of Youngpoong since, while the Choi family has handled Korea Zinc.

Youngpoong and the Chang family currently hold a combined 33.13 percent stake in Korea Zinc.

Korea Zinc CEO Park Ki-deok issued a statement on Wednesday, saying that “the tender offer is considered to be an attempt at a hostile takeover by a corporate raider,” warning the company will seek legal actions against Youngpoong and MBK.

Korea Zinc has claimed that the “hostile takeover” by MBK Partners may result in industrial technology leakage.

The local government of Ulsan, where Korea Zinc’s main production base is located, has also weighed in on the dispute to side with the current management of the zinc refiner.

Youngpoong and MBK Partners refuted the claims of the tender offer being an attempt at a hostile takeover, saying that it is aimed at bolstering control over the company as the largest shareholder. They are also accusing the incumbent chairman, the grandson of the co-founder Choi, of breach of duty and involvement in the alleged stock price manipulation of SM Entertainment.

BY SHIN HA-NEE [shin.hanee@joongang.co.kr]