Private equity firm MBK and Young Poong raise bid for Korea Zinc to $1.88 billion By Reuters

By Heekyong Yang and Joyce Lee

SEOUL (Reuters) – Private equity firm MBK Partners and Young Poong raised the price of their tender offer for Korea Zinc shares on Friday to match the counteroffer, as a takeover battle heats up for the world’s largest refined zinc producer from the world.

The new tender offer, valued at 2.51 trillion won ($1.88 billion), has an extended deadline of October 14.

Led by the Choi family, Korea Zinc has been in a bitter battle for control of the $12 billion zinc empire with the co-founding Chang family, whose electronics conglomerate Young Poong made an initial joint bid with MBK in September.

Each party, combined with their likely backers, owns about a third of the stake in Korea Zinc, according to calculations by Meritz Securities. The two groups declined to comment.

Both have made offers to minority investors to gain control, with Korea Zinc announcing a bid now matched by Young Poong and MBK on Wednesday.

The fight has gained global attention because Korea Zinc supplies raw materials for a host of high-end industries such as semiconductors and electric vehicle batteries. Concerns about ensuring supply chain control are also rising amid heightened trade tensions between the US and China.

Shares in Korea Zinc rose 8.8 percent after rising as much as 10.9 percent to a record high of 791,000 won on Friday after the announcement, still short of last bids of 830,000 won per share. The broader South Korean market closed 0.3 percent higher.

This was the second time MBK and Young Poong raised their bid price after the initial auction in September. Their offer on Friday matched rival Korea Zinc’s offer of 830,000 won per share.

Korea Zinc planned to buy back about 2.7 trillion won ($2.02 billion) of shares alongside Bain Capital, which offered to buy another 430 billion won of shares. The offer closes on October 23.

Both groups vying for Korea Zinc – whose clients include metals traders Glencore ( OTC: ), Trafigura and Sumitomo – said on Friday they would buy shares even if the amount fell short of target stakes.

Young Poong said his bid is aimed at participating in Korea Zinc’s management and improving its governance.

NATIONAL CORE TECHNOLOGY

The battle for control comes at a crucial time for South Korea, which is trying to implement corporate governance reforms to boost capital markets that have long been blocked by the influence of sprawling conglomerates.

Minority shareholders, who owned about 27 percent of Korea Zinc at the end of June, according to a company filing, will play a crucial role in determining the outcome of the takeover battle.

South Korea’s National Pension Service, a long-term investor that separately owns 7 percent, did not respond to a request for comment on its plans.

Korea Zinc last month asked the South Korean government to designate its battery component technology as core domestic technology that would require government approval for a foreign acquisition to proceed. South Korea’s Industry Ministry is due to hold a meeting on Friday.

The United States and its allies are trying to reduce dependence on China for critical metals.

“There are fears that this takeover by a venture capital firm could be a precursor to a sale to majority Chinese interests,” said Ian Satchwell, an adjunct professor at the University of Queensland’s Sustainable Minerals Institute.

MBK and Young Poong said last month that they have no plans to sell Korea Zinc to China.

A joint venture set up by Korea Zinc and LG Chem in South Korea is set to produce precursors, a key material for EV batteries. The precursors produced by the joint venture will be used in LG Chem’s cathode plant in the US, which is due to start mass production in 2026 to supply EV battery cathodes to General Motors (NYSE: ).

Korea Zinc has also looked at other overseas areas, including Australia, where it owns renewable energy and hydrogen company Ark Energy.

Michael Choi, CEO of Ark Energy, told local media in September that its investment plans would be “torn apart” under new owners.

The premier of Queensland state, where Ark Energy’s green hydrogen facility will be based, has urged Australian Prime Minister Anthony Albanese to use foreign investment review powers to protect local jobs, local media reported.

(1 USD = 1,333.7000 won)