Korea Zinc Takeover Battle Heats Up

By Heekyong Yang and Joyce Lee

SEOUL (Reuters) – Private equity firm MBK Partners and Young Poong on Friday raised their tender offer price for shares in Korea Zinc to match a counteroffer, as a takeover battle heats up for the world’s biggest refined zinc producer.

The new tender offer, valued at 2.51 trillion won ($1.88 billion), has an extended deadline to Oct 14.

Run by the Choi family, Korea Zinc has been embroiled in a bitter struggle for control of the $12 billion zinc empire with the co-founding Chang family, whose electronics conglomerate Young Poong made an initial joint offer with MBK in September.

According to calculations by Meritz Securities, each side in combination with their likely supporters holds about a one-third stake in Korea Zinc. The two groups have declined to comment.

Both sides have tendered offers to minority investors to gain control, with Korea Zinc announcing an offer now matched by Young Poong and MBK on Wednesday.

The battle has gained global attention because Korea Zinc supplies raw materials for a host of cutting-edge industries such as semiconductors and electric vehicle batteries. Concerns over securing supply chain control are mounting amid heightened U.S.-China trade tensions.

Korea Zinc shares closed up 8.8% after rising as much as 10.9% to a record high of 791,000 won on Friday following the announcement, still lower than the latest tender offers of 830,000 won per share. South Korea’s wider market closed up 0.3%.

This was the second time MBK and Young Poong raised their offer price following their original tender in September. The offer on Friday matched Korea Zinc’s rival offer of 830,000 won per share.

Korea Zinc planned to buy back about 2.7 trillion won ($2.02 billion) of shares alongside Bain Capital, which offered to buy another 430 billion won of shares. That offer closes on Oct. 23.

Both groups competing for Korea Zinc — whose customers include metals traders Glencore, Trafigura, and Sumitomo — stated on Friday that they would buy shares even if the amount fell short of their target stakes. Young Poong aims to participate in Korea Zinc’s management and improve its governance.

Core National Technology

The battle for control comes at a crucial time for South Korea, which is trying to implement corporate governance reforms to boost capital markets that have long been hindered by the influence exerted by sprawling conglomerates.

Minority shareholders, who owned about 27% of Korea Zinc as of the end of June according to a company filing, will play a crucial role in determining the battle’s outcome. The National Pension Service, a long-term investor holding a separate 7%, did not respond to a request for comment on its plans.

Korea Zinc requested the South Korean government last month to designate its battery component technology as a national core technology requiring government approval for foreign acquisitions. The industry ministry is scheduled to hold a meeting on Friday.

The United States and its allies aim to reduce reliance on China for critical metals. Concerns arise that this takeover by a venture capital firm may precede a sale to majority Chinese interests, said Ian Satchwell, an adjunct professor at the University of Queensland’s Sustainable Minerals Institute.

MBK and Young Poong clarified last month they had no intentions to sell Korea Zinc to China.

A joint venture set up by Korea Zinc and LG Chem in South Korea is set to produce precursors, a key EV battery material. These precursors will be used in LG Chem’s cathode plant in the U.S., slated to begin mass production in 2026 to supply EV battery cathodes to General Motors.

Korea Zinc has also been exploring overseas opportunities, including in Australia where it owns renewable energy and hydrogen company Ark Energy. Michael Choi, CEO of Ark Energy, indicated that investment plans would be ‘torn apart’ under new ownership.

Queensland’s premier urged Australian Prime Minister Anthony Albanese to utilize foreign investment review powers to protect local jobs in light of the developments.

($1 = 1,333.70 won)