A consortium of MBK Partners and Young Poong Corp. has raised its stake in Korea Zinc Inc. to 46.7% of voting shares, positioning the group closer to a majority control of the world’s largest lead and zinc smelter, MBK said on Thursday.
North Asia-focused buyout firm MBK and Young Poong, the single largest shareholder in Korea Zinc, together had acquired an additional 1.13% stake in the latter on the open market between Nov. 12 and Dec. 18.
The latest purchase has increased MBK Partners and Young Poong’s combined stake in Korea Zinc to 40.97% of the total issued shares and 46.7% of the voting shares, excluding treasury stock, MBK said in a press release.
That breaks down to MBK’s 7.82% and 33.15% by of Young Poong and its related parties’ stake.
The coalition’s stake increase may end its several months of battle against Korea Zinc’s management for control of the metal smelter, whose precursor manufacturing was designated as a core national technology by the government.
Market insiders say Korea Zinc Chairman Choi Yun-birm and his friendly shareholders have just around 34% of the company shares with voting rights.
The MBK-Young Poong group reportedly spent a total of 295 billion won ($203 million) to buy 234,451 shares in Korea Zinc between Nov. 12 and Dec. 18, or 1,250,000 won per share on average.
That is higher than the 1,034,400 won per share it paid for the zinc smelter’s shares on the market until early November following its tender offer at 830,000 won in October.
Its share price closed flat at 1,066,000 won on Thursday, against a 1.95% drop in the Kospi index.
HOSTILE TAKEOVER
Since the MBK-led alliance announced a tender offer to take over Korea Zinc in September, the Korean company has countered with share buybacks for retirement in October.
But both of them failed to secure a majority of Korea Zinc.
“MBK Partners and Young Poong have expanded their position as the largest shareholders of Korea Zinc,” MBK said in the press release.
“This acquisition lays a strong foundation for reclaiming our rights as the largest shareholder, including management control rights which legitimately belong to the largest shareholder, and serves as a pivotal step towards strengthening the company’s corporate governance,” said the private equity firm’s representative.
They are expected to wage a proxy fight at Korea Zinc’s extraordinary shareholder meeting on Jan. 23.
If the MBK-led group wins the battle, it will mark its first hostile takeover of a South Korean company.
By Jun-Ho Cha
chacha@hankyung.com
Yeonhee Kim edited this article.
