(LEAD) Korea Zinc to make counteroffer to buy back own shares to fend off MBK, Young Poong

(ATTN: ADDS more info from 6th para)

SEOUL, Oct. 2 (Yonhap) -- Korea Zinc Inc. said Wednesday it plans to make a counteroffer to buy back and cancel its own shares to fend off a tender offer by private equity firm MBK Partners and Young Poong, the biggest shareholder of the world's largest zinc smelter.

The widely expected move by Korea Zinc came shortly after a Seoul court dismissed an injunction requested by Young Poong, allowing the company to buy its own shares.

In a statement, Korea Zinc hailed the court's ruling, saying it confirms the company's plan to buy its own shares as a "legitimate act" to thwart a "hostile M&A" by MBK and Young Poong.

MBK, in cooperation with Young Poong, raised last week its original tender offer price for Korea Zinc to 750,000 won (US$568) per share from 660,000 won.

Media reports have speculated that Korea Zinc may buy back its own shares for more than 800,000 won per share.

Korea Zinc said its board of directors will make the buyback later in the day.

"The board of directors will meet to approve the acquisition of the company's own shares through a tender offer and cancel the acquired shares," the company said.

Meanwhile, Young Poong said it filed for a new injunction to halt Korea Zinc's buyback process.

The company claimed that the Korea Zinc board of directors' decision to buy back its own shares is a breach of trust because its share price, which has been rising sharply following MBK Partners' tender offer, will probably drop after the buyback.

Young Poong and MBK Partners have criticized Korea Zinc's current leadership, accusing it of weakening the company's financial health.

In the nation's capital market, Korea Zinc's move would mark the first saga where a company makes a counteroffer to thwart a tender offer.

The battle for management control of Korea Zinc has heated up as MBK teamed up with Young Poong and launched a public tender offer in mid-September to acquire a stake of up to 14.61 percent in the smelter.

Young Poong and investors supportive of it controlled a 33.13 percent stake, while Korea Zinc Chairman Choi Yun-beom and his supporting investors controlled a 33.99 percent stake, according to industry sources.

MBK and Young Poong have planned to gain a controlling stake in Korea Zinc after buying at least a 7 percent stake in the smelter.

The tender offer by MBK is worth 2.2 trillion won.

If Korea Zinc buys back a 7 percent stake through a planned counteroffer, Choi may seize the chance of victory in the management battle, some analysts said.

The ongoing conflict marks the end of decadeslong cooperation between Young Poong and Korea Zinc, which were co-founded in 1974 by Chang Byung-hee and Choi Ki-ho.

Since the founding, the Choi family has managed Korea Zinc, while the Chang family is in charge of Young Poong and other electronic parts affiliates.

Tensions escalated in 2022 when Choi Yun-beom, grandson of co-founder Choi Ki-ho, became chairman of Korea Zinc and sought to separate the company from Young Poong, sparking the current battle for control.

brk@yna.co.kr
(END)