Proxy fight over Korea Zinc’s management control intensifies

[Source : Korea Zinc]

A battle between two families over management rights to Korea Zinc is intensifying as Young Poong Co.’s affiliate Young Poong Precision plans to acquire an additional stake in the group’s non-ferrous metal smelting sister company.

Young Poong Precision said on Tuesday it will acquire an additional 62,056 shares of Korea Zinc for 35 billion won ($27.6 million) to tighten the grip on the company. The acquisition date is December 28, 2023. The acquisition is expected to bring Young Poong Precision’s ownership of Korea Zinc from 1.57 percent to 1.92 percent.

It is a small portion, but it is expected to play a crucial role in the ongoing proxy fight between the Young Poong’s founding families over management control of Korea Zinc, leading global metal smelting operator.

Korea Zinc is an affiliate of Young Poong Group, which was jointly established in 1949 by two founders, the late Jang Byung-hee and the late Choi Ki-ho. For zinc business, Young Poong, which operates a smelter, was managed by founder Jang, while Korea Zinc established as an affiliate in 1974 was managed by founder Choi. Korea Zinc is now run by a third generation of founder Choi, while it is more owned by founder Jang’s family.

Korea Zinc Chairman Choi Yoon-beom has not been shy about revealing his intention to separate the affiliates from parent Young Poong Group. He triggered a proxy fight against the Jang family by attracting LG Chem and Hanwha as a friendly suitor for Korea Zinc and narrowing the gap in stake ownership in Korea Zinc from over 10 percent early this year to 4 percent recently. It happened after Young Poong bought about 70 billion won worth of Korea Zinc shares.

From the Jang family’s point of view, it may be more advantageous to buy Young Poong Precision shares rather than buying Korea Zinc shares directly because the market capitalization of Young Poong Precision is about 190 billion won with more than half of its outstanding shares held by minority shareholders. For the Jang family to control the board of directors of Young Poong Precision, only 13 to 15 billion won will be required but to purchase a 1.92 percent stake in Korea Zinc to win majority ownership will amount to 215.5 billion won.

Shares of Korea Zinc and Young Poong Precision rose 2.8 percent and 1.6 percent, respectively, on Wednesday.