(Bloomberg) -- MBK Partners won’t raise its bid to gain control of Korea Zinc Co., the private equity group said on Wednesday, days before a tender offer for shares in the world’s biggest zinc smelter comes to a close.
In a statement, it said any further increase to the offer currently on the table would destroy value for Korea Zinc investors. It will also refrain from sweetening its bid for Young Poong Precision Corp., a key Korea Zinc shareholder with a nearly 2% stake.
One of North Asia’s biggest buyout shops, MBK has already raised its offer twice since stepping into the battle for Korea Zinc alongside top shareholder Young Poong Corp. It edged first to 750,000 won apiece and then to 830,000 won per share, valuing the company at 17.2 trillion won ($12.8 billion), in an effort to fend off Korea Zinc Chairman Choi Yun-beom’s effort to woo investors with a buyback, supported by Bain Capital.
“Price competition beyond the current offer would pressure the financial structure of Korea Zinc and Young Poong Precision,” MBK said in an emailed statement. Instead it will lean on an existing court effort to stop Korea Zinc’s share purchases.
Korea Zinc has said it considers the current offer to be “predatory and hostile”, and the company reiterated its concerns in response to MBK.
“Korea Zinc’s current management and all employees are opposed to this hostile M&A and will respond appropriately by considering the best way to protect corporate value and shareholder value and to ensure the long-term growth and development of the company,” a spokesman said by telephone.
Succession scuffles are not uncommon among Korea’s chaebols, but they rarely include private equity heavyweights. MBK has sought to reassure investors that it would hold the shares for about a decade, and it said on Wednesday that it would guarantee the employment of executives and employees at Korea Zinc. It also dismissed speculation it could sell the firm to Chinese buyers or leak technology overseas.
MBK’s announcement comes a day after South Korea’s financial watchdog said it would investigate potential unfair trading practices around the “overheated” takeover fight. Financial Supervisory Service Governor Lee Bokhyun asked officials to look into the acts including spreading rumors to interfere with the other party’s offer or influence the stock price.
MBK’s tender offer runs to Oct. 14.
--With assistance from Manuel Baigorri.
(Writes through with details, Korea Zinc comment)
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