Lee Yeon-woo is a financial journalist at The Korea Times. Her wide range of reporting includes policies, macroeconomics, stock market, companies and even crypto. She is passionate about connecting the dots in Korean finance and making it easier for foreign nationals to understand. Based on her previous experience as a national reporter, she also has a keen interest in social issues within the sector, including gender equality and ESG. Your tips and insights are always appreciated. You can send them to yanu@koreatimes.co.kr.
MBK Partners joins Korea Zinc power struggle
Korea Zinc Chairman Choi Yun-beom speaks at an event celebrating the company's 50th anniversary in Ulsan, July 31. Courtesy of Korea Zinc
By Lee Yeon-woo
Korea Zinc's largest shareholder, Young Poong, has decided to transfer more than half of its stake in the company to MBK Partners, a domestic private equity firm. This hostile move signals the end of 75 years of joint management between Korea Zinc and Young Poong.
MBK Partners announced Friday that it had signed a shareholder agreement with Young Poong, the largest shareholder of Korea Zinc, and the related parties — the family of Chang Hyung-jin, Young Poong's advisor and founder's son.
Under this agreement, MBK Partners has been granted the option to acquire 50 percent plus one share of Young Poong's 33.13 percent stake in Korea Zinc. Since MBK Partners holds one additional share, it will effectively lead the exercise regarding voting rights.
"I believe that passing the position of largest shareholder to professionals like MBK Partners, who are experts in corporate management and global investment, is the responsible role of the founding family and major shareholders," Chang said.
Starting Friday, MBK Partners and Young Poong have initiated a tender offer to secure additional shares. The suggested price is 660,000 won ($495.94).
Young Poong, founded by the late Chang Byung-hee and Choi Ki-ho, has historically operated under a split management system, with the Choi family overseeing Korea Zinc and the Chang family managing the electronics affiliates.
However, tensions between the two families have recently escalated over Korea Zinc's management rights, as Korea Zinc Chairman Choi Yun-beom, grandson of the founder Choi, sought independence from Young Poong.
Following the announcement, the Choi family countered, labeling it as a "hostile and predatory merger and acquisition." It stated that "Young Poong is colluding with corporate raider MBK to unilaterally proceed with a tender offer." The family owns a 33.99 percent stake in Korea Zinc.
Meritz Securities analyst Jang Jae-hyeok forecasted that it is unlikely that Korea Zinc will match the financial strength of Young Poong and MBK Partners.
To secure a majority stake, Young Poong would need to acquire an additional 16.87 percent, while Korea Zinc would need to purchase 16.02 percent, according to Jang. This would result in a combined cost of approximately 1.9 trillion won based on the current market capitalization.
"The renewed competition for shares is likely to increase short-term stock price volatility," Jang said.
Following the news, the stock price of Korea Zinc sharply soared, even surpassing the tender offer price of MBK Partners. It closed the market at 666,000 won, an increase of 19.78 percent compared to the previous trading day.