Korea Zinc, embroiled in a high-stakes control struggle, announced on Monday that it has acquired 9.85% of its shares through a $1.5 billion buyback, primarily aimed at discouraging shareholders from selling their stakes to top investor Young Poong and private equity firm MBK. Bain Capital, supporting Korea Zinc’s current leadership, separately secured a 1.41% stake. Together, these actions mark the Choi family’s attempt to counter Young Poong and MBK’s growing influence in the $18 billion zinc empire.
Choi Yun-beom, Korea Zinc’s chairman, emphasized the strategic importance of the buyback, stating, “This repurchase isn’t simply about shares; it’s a move to safeguard Korea Zinc’s independence.” Choi contended that the buyback, priced at 890,000 won per share, acts as a “defensive shield” against MBK and Young Poong’s efforts to gain control through a tender offer that has secured a 38.5% stake.
The power struggle between the Choi and Chang families, co-founders of Korea Zinc, has intensified investor interest, driving Korea Zinc’s shares to record highs, surging as much as 11.7% on Monday. “The rise in share prices reflects the confidence investors have in our approach to protect shareholder value,” Choi added. Yet, despite the buyback, Korea Zinc faces challenges in wielding voting power, as treasury shares lack voting rights. This has led Choi to explore additional strategies, focusing on acquiring more voting shares.
The Seoul Central District Court recently dismissed two injunctions filed by Young Poong, aiming to block the buyback. The court cited a lack of sufficient evidence to deem the buyback a breach of fiduciary duty. Choi responded by saying, “The court’s decision validates our position. We are committed to transparency and protecting Korea Zinc from undue influence.”
MBK and Young Poong expressed disappointment with the court’s ruling, labeling it a missed opportunity to address potential governance issues. They warned that Korea Zinc’s large-scale buyback could undermine its financial health and announced plans to request an extraordinary shareholder meeting.
Choi remains steadfast, asserting, “This buyback is not only financially prudent but essential to Korea Zinc’s autonomy. We are prepared to uphold this stance as we continue building for long-term growth.”
