MBK Partners upbeat about additional stake in Korea Zinc over management conflict

MBK Partners Vice President Kim Kwang-il, center, speaks during a press conference at a hotel in central Seoul, Sept. 19, when the company made a tender offer to buy Korea Zinc shares through the coaltion with Young Poong. Yonhap

Private equity firm MBK Partners announced Thursday that its recent acquisition of an additional stake in Korea Zinc, through its partnership with Young Poong, reflects strong market support for their objective of improving Korea Zinc's governance.

The announcement came after the coalition secured a 5.34 percent stake in Korea Zinc, Monday, as they wrapped up a multibillion-dollar tender offer to take control of the world's largest zinc smelter.

MBK Partners and Young Poong, the smelter’s largest shareholder, held a combined 33.13 percent stake in Korea Zinc before the tender offer was made in September.

The tender offer was part of a fierce battle to secure management rights over Korea Zinc, following the breakdown of a long-standing partnership between Young Poong and Korea Zinc.

“The additional 5.34 percent stake we’ve secured indicates that shareholders as well as the capital market acknowledge our commitment to improving Korea Zinc’s governance,” the private equity firm said in a press release.

MBK Partners assessed the acquisition of the 5.34 percent stake shows shareholders’ disappointment toward the countermeasure taken by Korea Zinc Chairman Choi Yun-beom against the collation’s tender offer.

Choi and his family currently own a total 15.6 percent stake in Korea Zinc, while shares owned by allies are estimated to be 34 percent to 36 percent.

The countermeasure was aimed at buying back Korea Zinc’s own shares at a higher price than the price offered by the MBK Partners-Young Poong coalition.

Accordingly, Choi offered to buy at 890,000 won per share, which was 60,000 won more than price offered by the coalition.

“The shareholders gave upper hand to us over Chairman Choi despite higher price he offered, by considering which party is more suitable for management that meets shareholders’ interests,” MBK Partners said.

The company warned against Choi and Korea Zinc, arguing they came up with “ceaseless slanders and groundless rumors” throughout the tender period.