Korea Zinc, South Korea’s leading non-ferrous metal producer currently embroiled in a power struggle for management control, is stepping up its defense by launching a 118 billion won ($90 million) tender offer for Young Poong Precision.
Young Poong Precision manufactures chemical process pumps and holds a 1.85% stake in Korea Zinc. Korea Zinc Chairman Choi Yun-beom and his family initiated this counter-tender offer against an alleged “hostile takeover attempt” by domestic private equity firm MBK Partners and Young Poong.
Young Poong Precision, with a market capitalization of roughly 400 billion won ($330 million), is considered a relatively affordable target in Korea Zinc’s efforts to safeguard its management control.
The Choi family plans to launch a tender offer for 3.975 million shares of Young Poong Precision, equivalent to a 25% stake, at 30,000 won per share from Oct. 2 to Oct. 21, according to sources familiar with the matter on Oct. 2. The Choi family currently owns a 35.45% stake in Young Poong Precision. This is over 10 percentage points higher than the 21.25% stake held by the Jang family, including advisor Jang Hyung-jin. Chairman Choi and his family aim to raise the family’s stake in the smelter from the current 35.45% to 60.45%.
Korea Zinc also plans to conduct a share buyback following a court ruling slated for Oct. 2. MBK Partners earlier filed a preliminary injunction to block Korea Zinc and its affiliates from buying back shares, citing the Capital Market Act, which aims to prevent market manipulation by prohibiting stake increases outside of a formal tender offer.
If the court rules in favor of Korea Zinc, the smelter will begin buying back shares at a price higher than MBK’s current offer of 750,000 won per share, at around 800,000 won per share. Korea Zinc said it will cancel all repurchased shares, a move designed to maintain management control while boosting shareholder value.
