(Courtesy of Getty Images)
Shares in Korea Zinc Inc. rallied on Thursday, the last day of its buybacks, against market expectations its share price would plummet after an MBK Partners-led group won a large enough stake to take control of the company in a tender offer.
Its share price skyroceted by its daily limit of 30% to finish at 1,138,000 won ($825). The closing price is 28% higher than Korea Zinc’s buyback offer of 890,000 won. In the morning, it briefly tumbled to as low as 856,000 won.
The world’s largest lead and zinc smelter has repurchased its shares from the market since early this month together with Bain Capital to counter a takeover bid by a consortium between MBK Partners and Young Poong Corp.
But the MBK-led group has already secured a 38.47% stake in Korea Zinc by Oct. 14, enough to exercise management rights for the smelter. 14, even at a lower price than the company’s buyback offer.
It was not immediately disclosed how many shares the metals company has bought back from the market over the past three weeks. Korea Zinc will unveil the buyback results on Oct. 29.
Analysts said Korea Zinc drew speculative investors betting on higher volatility due to a decrease in its free float.
Securities companies shorting the stock chased them higher in their hurry to return their borrowed shares.
Korea Zinc, led by Chairman Choi Yun-birm, aimed to buy back shares equivalent to a 20% stake and retire them.
But if the acceptance ratio reaches as much as 20% as it hoped, it will end up boosting MBK-led group’s stake with voting rights. Companies are not allowed to exercise shareholder rights for treasury stocks.
Meanwhile, Korea Zinc has bumped up its stake in Young Poong Precision Corp., which holds a casting vote in the management dispute for Korea Zinc, to 70%.
Its share price staged a rebound to soar by its daily limit of 30% to 26,000 won by market close. But it is still lower than Korea Zinc’s buyback offer of 35,000 won.
By Jong-Kwan Park
pjk@hankyung.com
Yeonhee Kim edited this article.
