(Oct 11): Korea Zinc Co has raised an offer to buy back its own shares, as the battle for control of the world’s top zinc smelter intensifies. 

A special purpose company led by Korea Zinc chairman Choi Yun-beom said on Friday it had increased its bid by 7.2% to 890,000 won (US$659 or RM2,833). That’s higher than a rival offer for the shares at 830,000 won from MBK Partners and Young Poong Corp, Korea Zinc’s top shareholder, which ends next Monday. They have said their offer will not be increased.

Korea Zinc shares swung between gains and losses after the announcement, but were trading well below both offer prices, suggesting the market was sceptical a deal will be completed on the current terms. As of 12.09pm in Seoul, the stock was up 0.3% at 791,000 won.

Friday’s move was the latest twist in a long-running saga at Korea Zinc, an influential player in the global metals market founded over 50 years ago. Choi, the grandson of one of the founders, and Young Poong, which is controlled by a rival family faction, disagree over the direction of the company and its role in the energy transition, and have been at loggerheads for many months.

MBK said on Friday that Choi’s tender price hike would have a negative impact on the firm and its debt pile, adding that it is looking at “every option to stop irreversible damage at Korea Zinc”, including pursuing its ongoing legal action.

South Korean conglomerates often grapple with succession feuds, but rarely do they include private equity. MBK, one of North Asia’s biggest buyout firms, lobbed its surprise offer with Young Poong in mid-September, saying that it wants to improve corporate governance at Korea Zinc. Then, earlier this month, Choi roped in Bain Capital to support its buyback.

Korea Zinc and Bain said on Friday that they would increase the amount of shares they are seeking — to 20% from 18% — in the offer that runs until Oct 23.

The takeover battle has attracted the attention of South Korea’s financial watchdog, who said it had become “overheated”. Financial Supervisory Service governor Lee Bokhyun warned earlier this week that any unfair trading practices would be investigated and punished.  

Korea Zinc also raised its bid for Young Poong Precision Corp by 17% to 35,000 won on Friday. Young Poong Precision has a 1.85% stake in Korea Zinc, making it important in the fight for the larger company. MBK also has an offer in for the unit, which expires next Monday.

Young Poong Precision was down 5.9% on Friday at 29,400 won.

Uploaded by Tham Yek Lee