Private equity fund MBK Partners and South Korean zinc producer Young Poong launched a 2 trillion won ($1.5 billion) tender offer for shares in Korea Zinc, which the target called a “hostile” takeover attempt.
The tender offer will seek to buy between 1.44 million and 3.02 million Korea Zinc shares, or between a 6.98% to 14.61% stake at 660,000 won per share, according to regulatory filings on Friday.
The shares were 556,000 won per share as of Thursday’s close.
Shares in Korea Zinc jumped 19.8% on Friday to trade slightly above the tender offer price as of 0327 GMT, while Young Poong shares rose by the daily limit of 30%.
Young Poong is already Korea Zinc’s largest shareholder, with a 25.4% stake as of end-June. If the tender offer is successful, MBK Partners and Young Poong combined will control a 40% stake in the firm.
MBK Partners said in a statement it plans to become the largest shareholder in Korea Zinc, partly by exercising a call option to buy some Korea Zinc shares already owned by Young Poong and associated entities.
The tender offer was intended to maximise shareholder value by consolidating management rights, improving governance, and enhancing corporate value, MBK and Young Poong said in a filing.
MBK Partners said Korea Zinc, as a company, must remain neutral when there is a dispute between shareholders, and added that its board was failing to function normally.
Korea Zinc said in a separate regulatory filing the offer was a “hostile, predatory M&A attempt” to wrest management control away from leadership that has maintained the firm’s No. 1 market share in non-ferrous metal manufacturing.
It also noted a series of recent safely-related deaths at Young Poong’s Seokpo smelter that led to its CEO’s arrest, saying Young Poong was trying to take over Korea Zinc with a private equity firm’s help after failing in its own business.
Young Poong declined comment.
Korea Zinc’s shares had risen 12% year-to-date as of Thursday’s close compared with a 42% slump in Young Poong’s shares this year.
($1 = 1,330.4600 won)
Reuters
