Korea Zinc Completes Share Buyback Amidst Ongoing Management Control Struggle

SEOUL: Korea Zinc Co., along with Bain Capital, has successfully acquired an 11.26 percent stake in the world's largest zinc smelter as part of a strategic buyback to safeguard its management from a multibillion-dollar takeover attempt by Young Poong Corp. and private equity firm MBK Partners. According to Yonhap News Agency, Korea Zinc had initially aimed to repurchase up to 20 percent of its stock at 890,000 won (approximately US$640) per share. This move is part of a broader battle for control over the smelter, with Young Poong and MBK having recently secured a 5.34 percent stake at 830,000 won per share, raising their total holdings to 38.47 percent. The buyback has bolstered the stake held by Korea Zinc Chairman Choi Yun-beom and his allies to 29.32 percent, up from 18.06 percent. Korea Zinc plans to cancel a 9.85 percent stake to enhance shareholder value, while Bain Capital's 1.41 percent stake is considered part of the company's friendly shares, raising its allied holdings to 35.4 percent. The compa ny projects its friendly shares, including those of the Choi family, will surpass 40 percent following the planned share cancellation, which would closely match the estimated 42 percent held by the Young Poong-MBK coalition. The ongoing conflict is expected to be a focal point in shareholders' meetings extending into the next year, with the National Pension Service (NPS), holding a 7.83 percent stake, seen as a potential deciding factor. Young Poong has called for an extraordinary shareholders meeting to discuss changes to Korea Zinc's board and corporate governance, warning that it may seek court intervention if the board does not comply. In a recent statement, MBK expressed satisfaction with shareholders who opted not to sell their shares for short-term gains. The coalition, which initially declared its intention to acquire a 14.61 percent stake in Korea Zinc, has increased its offer price twice, settling at 830,000 won per share. Korea Zinc argues that its counteroffer to buy back shares at a higher pri ce is intended to enhance shareholder value through the planned cancellation of treasury stocks. The company has been advocating for significant investments in renewable energy and other growth sectors, a strategy not favored by Young Poong, which prioritizes strong dividends. MBK, a major North Asian buyout firm, has pledged to consolidate management rights and improve governance and financial stability, while Korea Zinc warns that such a move could risk transferring control to foreign entities, threatening national industrial competitiveness. The financial markets reacted positively to the developments on Monday, with Korea Zinc shares rising 3.8 percent to 1,301,000 won, and Young Poong shares climbing 7.5 percent to 396,500 won, both outperforming the Korea Composite Stock Price Index's 1.1 percent increase.