No clear winner in sight: How will Korea Zinc takeover dispute unfold?

Kim Kwang-il, a partner at MBK Partners, speaks during a press conference at Lotte Hotel Seoul, Tuesday. Yonhap

Korea Zinc Chairman Choi Yun-beom and the MBK Partners-Young Poong alliance’s battle for managerial control of the world’s largest zinc smelter is at a critical juncture, as the MBK side, despite being the largest shareholder, has expressed uncertainty about securing a victory.

As both sides aim to sway shareholders through governance reforms and value protection measures, the situation is poised to drag on, with no clear winner in sight.

The dispute’s future hinges on the decisions of key institutional shareholders, particularly the National Pension Service (NPS), which holds around 4 to 5 percent of Korea Zinc’s shares. Its support could significantly influence the outcome.

During a press conference on Tuesday, Kim Kwang-il, a partner at the private equity firm overseeing the Korea Zinc deal, mentioned the alliance’s plan to propose the appointment of 14 directors at the extraordinary shareholders’ meeting of the zinc smelter, scheduled for Jan. 23. He stated he is “not confident” about getting all 14 appointed to the board.

The comments indicated that, although holding an advantage in the equity stake battle against Choi, victory cannot be guaranteed if major shareholders, excluding the parties involved in the management rights dispute, side with Choi.

Kim noted that if the restructuring of the board is successful at the extraordinary shareholders’ meeting, measures to protect shareholder value, such as a stock split and the cancellation of all treasury shares, will be implemented.

“As Korea Zinc’s largest shareholder, MBK plans to swiftly promote shareholder returns and improve corporate governance following the board's expansion and reorganization,” he said.

He proposed a plan to regularize the disclosure of the dividend policy to enhance predictability regarding dividends as part of the shareholder return policy.

To improve Korea Zinc’s governance, Kim vowed to push for plans to strengthen the authority of the internal transactions committee within the board and establish new committees, including an investment review committee and an ESG and gender equality committee.

“(Although the MBK-Young Poong alliance is the largest shareholder,) we are still outsiders to Korea Zinc. We plan to enter the board, review these proposals and have them passed at either the upcoming regular shareholders’ meeting or the next one,” Kim said.

However, Kim pointed out that it is not possible to pass all the director appointment proposals on their own as the MBK-Young Poong alliance is in a position where they "need to persuade and explain to the shareholders.”

“If all the supporters claimed by Choi side with him, and the remaining shareholders also vote in favor, we cannot win,” Kim said.

Korea Zinc Chairman Choi Yun-beom speaks during a press conference at the Korea Chamber of Commerce and Industry in central Seoul, Nov. 13. Yonhap

The alliance’s stake in Korea Zinc is 39.83 percent, 5.41 percentage points higher than Choi and his supporters.

Choi’s stake, when including friendly shares from Hanwha, Hyundai Motor, LG and others, is estimated to be around 34.42 percent.

With a 5.41 percentage point difference, neither side can guarantee victory at next month's extraordinary shareholders’ meeting, so the management rights dispute could drag on.

Ultimately, the stance of the NPS and other major shareholders will be decisive in shaping the outcome of the dispute.

Commenting on this, Kim said, “No one can confidently predict what decision the NPS will make.”