(Bloomberg) -- Korea Zinc Co., which is fending off a takeover bid from private equity firm MBK Partners and Young Poong Corp., warned of supply disruptions for South Korean industry if the offer is successful.
In the first media conference since MBK teamed up with the company’s biggest shareholder to launch a surprise bid, Korea Zinc Co-Vice Chairman Lee Je-jung said the takeover could choke local supplies of zinc and lead and force local auto, steel and semiconductor companies to import raw materials, inflating their costs.
“MBK is simply after money,” Lee told reporters. “We cannot accept this kind of predatory action against us.”
Shares in the world’s biggest zinc smelter have surged since the MBK bid on speculation it may tap rival bidders to counter the buyout firm. Korea Zinc has been approaching firms including Hanwha Corp., a Korea Zinc shareholder, local media reported.
The battle for control over Korea Zinc, founded more than 50 years ago by two families, has implications beyond South Korea as the company accounts for around 5% of the world’s refined zinc output.
Some of Korea Zinc’s minority shareholders, including commodities trader Trafigura Group and Hanwha and LG Chem Ltd. have raised concerns that a private equity bid could destabilize the company and undermine some of the strategic partnerships it has struck in recent years.
“We are concerned that the current dispute could add uncertainty to the future cooperation between LG and Korea Zinc,” a spokesperson for LG Chem said. A spokesperson for Hanwha said it was “closely looking into the matter.” Both companies declined to comment on whether they will team up with Korea Zinc in a rival bid.
“The current Korea Zinc management team has successfully operated the business, enabling the company to maintain its market-leading position through the Onsan and Sun Metals facilities,” Trafigura said in a statement. “As shareholders, we are monitoring any corporate actions that may disrupt the company’s operations or future prospects.”
Korea Zinc’s shares surged around 35% over the past couple of weeks, and hit a record high, after the MBK offer. The stock has retreated by almost 5% this week as rival bidders failed to emerge, but is still around 4% above the MBK offer price.
--With assistance from Shinhye Kang, Archie Hunter and Mark Burton.
(Updates with details and shareholder comments throughout. An earlier version of this story corrected Korea Zinc’s proportion of global output in 5th paragraph.)
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