MBK Partners, a private equity firm that teamed up with Young Poong to launch a tender offer for Korea Zinc, has denied claims that the bid is a “hostile takeover,” stating that the move is “intended to strengthen management control of the largest shareholder.”
The private equity firm and Young Poong announced a 2 trillion won ($1.5 billion) tender offer to secure a controlling stake in Korea Zinc on Sept. 13. The goal is to acquire 7% to 14.6% of Korea Zinc’s shares until Oct. 4.
In a statement released on Sept. 18, MBK Partners and Young Poong emphasized that “the tender offer is clearly intended to strengthen the management control of the largest shareholder.” They dismissed the claims of a hostile takeover as “nonsense,” pointing out the disparity in shares held by the Jang and Choi families.
Korea Zinc, South Korea’s leading non-ferrous metal producer and a key subsidiary of Young Poong Group, was founded by the late Jang Byung-hee and Choi Ki-ho. The Jang family currently controls Young Poong Group and its electronic affiliates, while the Choi family controls Korea Zinc.
MBK Partners highlighted the longstanding gap between the Jang and Choi families’ stakes in Korea Zinc. In 2002, the Jang family owned 45.51% of the company, compared to the Choi family’s 13.78%, resulting in a 31.73 percentage point gap. Young Poong and the Jang family currently own 33.1% of Korea Zinc’s shares, more than double the Choi family’s 15.6%.
“Considering the significant gap between the largest and second-largest shareholders, it is strange that acquiring additional shares in the company to strengthen management control can be seen as a hostile takeover,” said Young Poong. The company criticized Korea Zinc Chairman Choi Yun Beom for allegedly neglecting his role in managing the company for the benefit of all shareholders and attempting to control it privately.
In response to criticism that MBK Partners is backed by Chinese capital, the firm clarified its status as a “domestic private equity fund” established in 2005 under the Capital Markets Act and supervised by Korea’s financial regulators. “MBK Partners is not a Chinese fund,” the private equity firm stated.
“The limited partners investing in MBK funds include leading domestic and global pension funds and financial institutions, and it is not true that Chinese capital constitutes most of our funds,” the firm added.
MBK Partners stressed that local investment managers manage the firm’s domestic investment activities. “Limited partners do not participate in investments or have access to the assets or technologies of the companies we have invested in,” addressing concerns about potential overseas technology leaks.
Korea Zinc CEO Park Ki-deok refuted Young Poong and MBK Partners’ claims, openly criticizing the tender offer. “Korea Zinc opposes the tender offer,” he said on Sept. 18. “MBK Partners has repeatedly engaged in predatory takeovers and management practices, such as acquiring competitive companies in Korea, selling off core assets, or focusing solely on recovering investment through excessive dividends.”
“This tender offer is also a hostile takeover attempt by a corporate raider, and it is particularly concerning since Korea Zinc is the world’s largest non-ferrous metal producer and a key national industry,” he added. “MBK has also secured a call option on shares held by Young Poong and its related parties, raising the chances that they will take control of our company’s management and later resell it to foreign capital.”
The power struggle between the founding families over Korea Zinc’s management rights has sparked controversy in Korea, with politicians now criticizing MBK Partners’ involvement. The southeastern port city of Ulsan, home to numerous factories run by the country’s leading manufacturers, has also opposed MBK Partners’ bid for Korea Zinc.
“Korea Zinc is a local company that has been with Ulsan for the past 50 years and a global company responsible for driving the country’s future growth,” said Ulsan Mayor Kim Doo-gyum during a press conference held in the Ulsan City Hall press room on Sept. 18. “Such a company must remain rooted in Ulsan, Korea’s industrial capital.”
The city announced plans to launch a share buyback campaign, urging its 1.2 million citizens to “save Korea Zinc” from the tender offer.
The Ulsan City Council also issued a statement the previous day. “Korea Zinc has been with Ulsan for 50 years. If it falls into the hands of Chinese capital through a hostile takeover, it will undoubtedly hurt Ulsan’s local job market and market order.”
