(Bloomberg) -- Korea Zinc Co. shares jumped 30% on Thursday, as investors waited for the results of a stock buyback initiated by Chairman Choi Yun-beom in an effort to defend the world’s biggest zinc smelter from a $12.5 billion takeover offer.
The shares were trading at 1,138,000 won apiece as of 11:21 a.m. in Seoul after the stock hit the daily upward limit. That level, well above the 890,000 won buyback offer that expired on Wednesday, suggests that some investors are holding out for an even higher proposal as the battle for control continues.
Choi, who has support from Bain Capital, has offered to repurchase as much as 20% of the stock to fend off a proposal from Young Poong Corp., the company’s biggest shareholder, backed by another private equity firm, MBK Partners. That bid — worth a more modest 830,000 won per share — expired last week, and took the Young Poong side’s stake to more than 38%.
Before the buyback, Choi had the support of about 34% of shareholders.
Korea Zinc shares have now more than doubled since Young Poong and MBK launched their offer in mid-September.
“The current price is not sustainable,” said Kim Dojoon, chief investment officer and chief executive officer at Zian Investment Management. “The stock is no longer in the investment field. It has entered the field of speculative betting.”
(Updates with more details, and investor comment in 5th paragraph)
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