The Korea Corporate Governance Forum evaluated that MBK Partners' public tender offer for Korea Zinc will contribute to the development of the domestic capital market.
On the 25th, the Korea Corporate Governance Forum stated in a commentary issued under the name of Chairman Namwoo Lee, "It provides an opportunity to re-evaluate not only Korea Zinc but also the various rights held by undervalued domestic listed companies."
The forum cited the Chartered Financial Analyst (CFA) Institute, saying, "The value of a stock is determined not only by rights to the company's future profits but also by various other rights," and viewed this public tender offer as a reminder of shareholders' diverse rights such as board appointments, shareholder proposals, and mergers and acquisitions (M&A).
The forum said, "Family businesses are a decent business model if they consider ordinary shareholders," but added, "However, after the first and second generations, the third generation usually faces a crisis."
It then assessed that Chairman Yunbeom Choi, the third-generation manager of Korea Zinc, has not yet proven his management capabilities.
The forum mentioned, "Since his appointment as CEO in 2019, profitability has deteriorated and borrowings have increased, failing to enhance corporate value," and added, "Korea Zinc's stock price showed lower investment performance during this period compared to the KOSPI, which is the slowest among developed countries."
The forum analyzed that despite Korea Zinc's recent shareholder-friendly moves, the stock price failed to gain momentum due to increased financial debt, aggressive investment plans, and concerns about governance.
From a governance perspective, it emphasized that before Chairman Choi seeks help from large corporations, he must promise to prioritize protecting the interests of ordinary shareholders such as the National Pension Service, institutional investors, and individuals.
It also advised that Hanwha Group, LG Chem, and Hankook Tire, which hold Korea Zinc shares unrelated to their core businesses, should sell those shares in the market. It recommended that Hyundai Motor Company, which participates in Korea Zinc's board, also discuss selling its Korea Zinc shares.
The forum questioned, "Does Apple hold cross-shareholdings when collaborating with Google?" and stated, "Japan is gradually reducing cross-shareholdings, so our leading companies using treasury stocks to form cross-shareholdings is a challenge to the market, shareholders, and government policies."
Furthermore, the forum urged Korea Zinc's board to maintain independence during this public tender offer phase and make the best decisions from the perspective of ordinary shareholders.
The forum argued that Korea Zinc's board should conduct a mid-term review of the Ignio Holdings investment and request a post-report on the One Asia Partners investment from the standpoint of fiduciary duty.
The forum also urged MBK Partners to publicly tender for all shares of Korea Zinc, not just a portion, stating that acquiring management rights by purchasing only some shares does not protect ordinary shareholders.
According to the forum, South Korea is the only developed country where it is possible to publicly tender for only part of the shares while acquiring management rights.
The forum emphasized, "Controlling shareholders and management must always be vigilant and strive to maintain a high stock price," explaining that this is why CEOs of U.S. big tech companies like Apple, Nvidia, and Microsoft are loved by shareholders without worrying about public tender offers.
MBK Partners, together with Youngpoong, the largest shareholder of Korea Zinc, has been conducting a public tender offer for 6.98% to 14.61% of Korea Zinc shares from the 13th of this month until July 4th. The transaction size is expected to reach up to 2 trillion won.
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