(Bloomberg) -- Korea Zinc Co., which is fending off an unsolicited bid for control from a private equity firm, has roped in Bain Capital to buy back up to 18% outstanding shares of the Seoul-listed company.
In a regulatory filing on Wednesday, Korea Zinc and buyout shop Bain offered 830,000 won per share to buy back shares of the company, a 10.7% premium over the 750,000 won of sweetened offer from its largest shareholder Young Poong Corp. and private equity firm MBK Partners Ltd.
The market has been waiting for Korea Zinc’s counter move ever since MBK lobbed its surprise offer last month. But a share buyback fell short of a full-blown counter bid that the local media had been speculating. Korea Zinc shares rose as much as 7.6% to 740,000 won on Wednesday after the news, but still traded short of MBK’s offer valuing the company at 15.5 trillion won ($11.6 billion).
The intensifying battle for Korea Zinc, an influential player in the global metals market, is the latest twist in the long-simmering saga over the control of a company founded more than 50 years ago. Korea Zinc Chairman Choi Yun-beom, who is the grandson of one of the founders, and Young Poong, which is controlled by the rival faction, differ over the strategic direction of the company that has focused on zinc refining business for years.
“I deeply apologize for causing so much worry to our shareholders, employees, suppliers, and the people of Korea,” Choi told reporters in Seoul, after announcing the buyback.
MBK said it wants to improve Korea Zinc’s corporate governance, but Korea Zinc has rejected the private equity overtures, and said the buyout firm is planning to sell the South Korean company to Chinese buyers, a claim MBK has refuted.
“However, this war facing Korea was not of our choosing. Our company and its employees can and must use this crisis as an opportunity for new changes and leaps forward,” Choi added.
Since his appointment as the chairman in 2022, Choi, 49, has said he wants to stake the company’s future on green transition, and outlined ambitious plans to invest in battery materials. Young Poong, on the other hand, is keen to see Korea Zinc maintain its healthy dividend.
Korea Zinc said it will cancel 3.2 million shares afer the successful buyback offer, which will be open between Oct. 4-23. Bain will participate in the purchase as a financial investor and its investment would be up to 430 billion won, according to Korea Zinc.
Korea Zinc’s share buyback could saddle the company with higher debt and lower its ability to dividends, MBK said in a statement Wednesday. MBK’s tender offer will expire this Friday.
--With assistance from Seyoon Kim and Youkyung Lee.
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