Korea Zinc partners with Bain Capital on share buyback to halt takeover bid

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Korea Zinc partners with Bain Capital on share buyback to halt takeover bid

Published: 02 Oct. 2024, 18:49 Updated: 02 Oct. 2024, 19:22

KIM JU-YEON
kim.juyeon2@joongang.co.kr

Korea Zinc Chairman Choi Yun-beom speaks at a press conference held at the Grand Hyatt hotel in Yongsan District, central Seoul, on Wednesday. [YONHAP]

Korea Zinc, the world’s largest zinc smelter, made a public tender offer Wednesday to acquire up to 18 percent of the company's shares, countering Young Poong and MBK Partners’ offer for a controlling stake.

A Seoul court on the same day dismissed Young Poong’s request for an injunction that would have prevented Korea Zinc from pursuing a share buyback from Sept. 13 to Oct. 4, during which Young Poong, Korea Zinc’s largest shareholder, and MBK Partners’ tender offer for up to 14.6 percent of the company takes place.

Korea Zinc Chairman Choi Yun-beom said the firm, along with U.S. investment company Bain Capital, has reserved 3.1 trillion won ($2.35 billion) to buy 3,209,009 shares, or 18 percent, at 830,000 won each. This is around 10.6 percent higher than the 750,000 won offered by Young Poong and MBK Partners.

Of the 3.1 trillion won, 2.7 trillion won will come from Korea Zinc for a maximum 15.5 percent stake. Bain Capital will only be participating as a financial investor, and will take up to 2.5 percent of the shares, according to the smelter.

“There is no future for Korea Zinc should the allied Young Poong and MBK Partners seize management through a hostile public offer,” Chairman Choi said at a press conference at the Grand Hyatt hotel in central Seoul, shortly after Korea Zinc filed its share buyback plan.

The chairman argued that only Korea Zinc’s current management and workforce knew the inner workings of the company as well as its future growth plans, including the zinc producer’s investment in copper recycling.

“Just because Young Poong has a 25 percent stake does not mean it is the owner of Korea Zinc. Young Poong has never managed the company before,” Choi said.

“If MBK Partners takes over management, they will eventually end up selling Korea Zinc to the buyer that offers the highest price,” he said, adding that Young Poong should take caution against “being used by MBK Partners by getting involved in their hostile M&A [merger and acquisition], only to sell their quality Korea Zinc shares for a cheap price.”

Korea Zinc Chairman Choi Yoon-beom, center, talks to the local press on the zinc smelter's plans for a share buyback at the Grand Hyatt hotel in central Seoul on Wednesday. [YONHAP]

The chairman said he was “willing to resolve past misunderstandings with Young Poong’s adviser, Jang Hyung-jin, so that the two companies can find a solution to the issues they face,” while urging Young Poong to also sell its shares to Korea Zinc.

Young Poong was co-founded by Chang Byung-hee and Choi Ki-ho in 1949, while its affiliate, Korea Zinc, was founded in 1974. The Chang family has since managed Young Poong while the Choi family has headed Korea Zinc.

The two families began their management feud in 2022, after Korea Zinc’s incumbent Chairman Choi took office and began actively seeking partnerships with third parties, such as Hyundai Motor Group, to expand the firm’s portfolio into EV materials.

Young Poong and MBK Partners had cited management issues within Korea Zinc for their takeover of the company. The latter said “Korea Zinc’s public tender offer, which is much higher than normal market prices, is a breach of trust and contains many legal risks” in a statement on Wednesday.

BY KIM JU-YEON [kim.juyeon2@joongang.co.kr]