MBK spices up yearslong feud over Korea Zinc

Youngpoong Group’s adviser Chang Hyung-jin (left) and Korean Zinc chairman Choi Yun-beom (Newsis)

MBK Partners, a big-name private equity house based in South Korea, has stepped into the ongoing management dispute involving the country’s leading zinc smelter Korea Zinc, siding with its rival Youngpoong Group.

Youngpoong Group’s owning family, the Chang clan, which holds a combined 33.1 percent shares in Korea Zinc, teamed up with MBK Partners by signing a shareholder agreement Thursday, in an agreement to jointly exercise voting rights on the shares.

The two also agreed on a call option contract, which enables MBK Partners to own one more share than those owned by Youngpoong Group’s owning family and related parties at a determined time.

On Friday, MBK Partners has also launched a tender offer to take an additional 14.6 percent stake in the company. The tender offer price is set at 660,000 won ($500) per share. The price is slightly lower than the Friday's closing price of 666,000 won. The stock price surged nearly 20 percent from the previous day with the announcement on the tender offer launch. The plan would cost MBK Partners as much as around 1.99 trillion won.

If the tender offer goes as planned, MBK Partners and the Chang family would control a 47 percent stake in the company, which surpasses the 33.6 percent owned by Korean Zinc Chairman Choi Yun-beom and related parties. When excluding stakes without voting rights, the alliance would control 52 percent stake in Korea Zinc.

MBK Partners said the move aimed to “improve the governance and corporate value of Korea Zinc which have been damaged by the ‘agency problem,’” referring to a conflict of interest that occurs when agents do not properly represent the best interests of principals.

Joining hands with the Chang family, the private equity house has decided to engage in the yearslong dispute between Korea Zinc and Youngpoong Group.

Non-ferrous metals manufacturer Korea Zinc was co-founded in 1974 by Chang Byung-hee and Choi Ki-ho. Since then, the Choi family has managed Korea Zinc, while the Chang family has run Youngpoong Group and other electronic parts affiliates.

Though the partnership between Korea Zinc and Youngpoong has spanned decades, the two families have been locked in a battle for management control over the years.

Chairman Choi, the grandson of the co-founder Choi Ki-ho, expressed his determination to separate his company from Youngpoong, when he took office in 2022

Siding with Youngpoong’s Chang family, MBK Partners is expected to seek control over Korea Zinc, a prominent company with an over 13 trillion won market cap as of Friday.

The move resembles when MBK Partners launched a public tender offer for Hankook & Co., the holding company behind Korea's largest tire maker, Hankook Tire & Technology, in December.

The private equity giant teamed up with the Cho siblings, who were fighting over control of the company with other family members. The alliance eventually fell through as the tender offer failed to meet its target.

With the rising uncertainty of the management feud, shares of Youngpoong jumped to the upper price limit of 386,000 won, up 89,000 won or 29.97 percent. The tender offer bid will continue until Oct. 4.

By Im Eun-byel(silverstar@heraldcorp.com)