SEOUL, Sept 13 (Askume) – Private equity fund MBK Partners and South Korean zinc producer Young Poong (000670.KS) have invested in Korea Zinc.) (010130.KS) launched a 2 trillion won ($1.5 billion) tender offer in what it described as a “hostile” takeover attempt.
The tender offer will seek to buy 1.44 million to 3.02 million shares of Korea Zinc at 660,000 won per share, or a 6.98% to 14.61% stake, according to a regulatory filing on Friday.
As of Thursday’s close, the stock was priced at 556,000 won per share.
By 0327 GMT, Korea Zinc shares were up 19.8% on Friday, trading slightly above the tender offer price, while Young Poong shares were trading in the 30% range.
Young Poong is already Korea Zinc’s largest shareholder, holding 25.4% of shares as of the end of June. If the tender offer succeeds, MBK Partners and Young Poong will collectively control 40% of the company.
MBK Partners said in a statement that it plans to become the largest shareholder of Korea Zinc by exercising call options to buy some of Korea Zinc’s shares owned by Young Poong and related entities.
MBK and Young Poong said in a filing that the tender offer aims to maximize shareholder value by strengthening management rights, improving governance and enhancing corporate value.
MBK Partners said that Korea Zinc, as a company, should remain neutral when there is a dispute between shareholders, and its board of directors failed to function properly.
Korea Zinc said in a separate regulatory filing that the offer was a “hostile, predatory takeover attempt” to snatch management control from the leadership position that has made the company dominate the non-ferrous metal manufacturing industry’s market share in the first place.
It also noted that a series of recent safety-related deaths at Young Poong’s Seokpo smelter led to the arrest of its CEO, and that Young Poong sought help from a private equity firm after his business at Korea Zinc failed.
Young Poong declined to comment.
As of Thursday’s close, Korea Zinc shares were up 12% so far this year, while Young Poong shares were down 42% this year.
(1 USD = 1,330.4600 Korean Won)
