(Bloomberg) -- Korea Zinc Co., which is fending off an unsolicited bid for control from a private equity firm, said Tuesday the company could see an exodus of skilled workers under the ownership of a buyout firm.
Shares in the world’s biggest zinc smelter have surged since MBK teamed up with Korea Zinc’s largest shareholder to take control of the Seoul-listed company, amid speculation it may tap white knights to counter MBK.
In the first media conference since MBK’s surprise move this month, Korea Zinc’s co-vice chairman Lee Je-jung was mum on rival bidders. Instead, Lee warned that MBK’s takeover could potentially choke supplies of zinc and lead and force South Korean auto, steel and semiconductor companies to import raw materials, thereby inflating their input costs.
The battle for control over Korea Zinc has consequences beyond the South Korean borders as the company accounts for around 5% of the world’s refined zinc output.
Korea Zinc stock jumped more than 30% to hit record high last week after MBK’s announcement. Despite a retreat this week with traders disappointed by a lack of news on rival bidders, it still trades about 4% above MBK’s offer.
MBK’s Bid to Control Korea Zinc Values Co at $10.3 Billion
Founded more than 50 years ago by two business families, Korea Zinc finds itself in the throes of a bitter ownership battle due to the differences over the company’s future direction. While the current Chairman Choi Yun-beom wants to peg the company’s future on energy transition by investing in clean power and electric vehicle batteries, the rival faction is keen for the company to maintain strong dividends.
Just as the ownership feud was playing out in the South Korean courts this year, one of North Asia’s biggest buyout firm MBK offered a 19% premium to take control of the company. That took Korea Zinc, which counts commodities trader Trafigura, and South Korean conglomerates including Hanwha and LG Chem as its shareholders, by surprise.
--With assistance from Shinhye Kang.
(Corrects zinc output in fourth paragraph.)
©2024 Bloomberg L.P.
