Private Equity Firm MBK and Young Poong Increase Korea Zinc Tender Offer to $1.88 Billion, Reports Reuters

By Heekyong Yang and Joyce Lee

SEOUL – Private equity firm MBK Partners and Young Poong have increased their tender offer price for shares in Korea Zinc to counter a rival offer, intensifying the competition for control of the world’s leading refined zinc producer.

The updated tender offer, valued at 2.51 trillion won ($1.88 billion), now extends its deadline to October 14.

Korea Zinc, managed by the Choi family, is embroiled in a fierce struggle for dominance over its $12 billion zinc empire against the Chang family, who co-founded the company. Young Poong, the electronics conglomerate associated with the Chang family, initially joined forces with MBK for a joint offer in September.

According to calculations by Meritz Securities, each faction, along with their potential allies, controls approximately a one-third stake in Korea Zinc. Both parties have opted not to comment on the situation.

In a bid to gain control, both groups have made tender offers to minority investors. Korea Zinc recently announced an offer that has now been matched by Young Poong and MBK.

This confrontation has attracted global scrutiny as Korea Zinc is a crucial supplier of raw materials for several advanced industries, including semiconductors and electric vehicle batteries. Concerns about securing control of supply chains have escalated amidst ongoing U.S.-China trade tensions.

Following the announcement, shares of Korea Zinc surged by 8.8%, reaching a peak of 10.9% at 791,000 won—still below the latest tender offer of 830,000 won per share. In contrast, South Korea’s broader market saw a modest increase of 0.3%.

This marks the second time MBK and Young Poong have revised their offer price following the initial tender in September to match the competitor’s price of 830,000 won per share.

Korea Zinc is planning to repurchase around 2.7 trillion won ($2.02 billion) of its shares, in conjunction with Bain Capital, which has proposed acquiring an additional 430 billion won worth of shares. This offer is set to close on October 23.

Both factions vying for Korea Zinc—whose clients include major metal traders—have expressed their intent to purchase shares even if they do not reach their targeted stakes.

Young Poong has indicated that its offer is aimed at participating in the management of Korea Zinc and enhancing its governance.

CORE NATIONAL TECHNOLOGY

The contest for control comes at an important moment for South Korea, which is attempting to implement corporate governance reforms intended to invigorate capital markets that have historically been inhibited by the dominance of large conglomerates.

Minority shareholders, who collectively owned about 27% of Korea Zinc as of June, will play a pivotal role in influencing the outcome of the takeover bid. The National Pension Service of South Korea, a long-term investor with a separate 7% stake, has not yet commented on its intentions.

Last month, Korea Zinc requested that the South Korean government designate its battery component technology as a national core technology, which would require government approval for any foreign acquisition. A meeting involving the industry ministry is scheduled for Friday.

The United States and its allies are looking to decrease dependency on China for critical metals. Concerns have been raised regarding the potential for this acquisition by a venture capital firm to lead to an eventual sale to majority Chinese interests. However, MBK and Young Poong have publicly stated that they have no plans to sell Korea Zinc to Chinese entities.

Korea Zinc’s joint venture with LG Chem in South Korea is poised to produce precursors, vital materials for electric vehicle batteries. The precursors generated by this partnership will be utilized in LG Chem’s cathode manufacturing facility in the U.S., which aims to commence mass production in 2026 to supply cathodes for General Motors.

Additionally, Korea Zinc is exploring opportunities abroad, including in Australia, where it owns the renewable energy and hydrogen firm Ark Energy.

Michael Choi, CEO of Ark Energy, noted that its investment plans could face significant disruptions under new ownership.

The premier of Queensland, where Ark Energy’s green hydrogen project will be based, has encouraged the Australian Prime Minister to employ foreign investment review powers to safeguard local employment.