Choi Yoon-beom, Chairman of Korea Zinc, Draws Attention on 'Management Rights Defense' Tender Offer
Youngpoong and MBK May Raise Price from 750,000 Won
Possibility of Youngpoong and MBK Selling Shares in 80,0000 Won Range in Response to Tender Offer
On the 27th, the second day after MBK Partners and Youngpoong raised the public tender offer price for Korea Zinc to 750,000 won, Korea Zinc opened the market at 720,000 won, up 7,000 won (0.98%) from the previous trading day. Both the previous day's closing price (713,000 won) and the next day's opening price (720,000 won) were lower than the new public tender offer price of 750,000 won, indicating a lukewarm market response. However, the parties involved in the management rights dispute remain on high alert.
The Full-Scale 'Money War': Will Korea Zinc Play the 'Counter Tender Offer' Card?
After MBK and Youngpoong raised Korea Zinc's public tender offer price from the previous 660,000 won to 750,000 won the day before, the management rights dispute at Korea Zinc has entered a full-fledged money game. Inside and outside the business community expect Korea Zinc to launch a counter tender offer against Youngpoong and MBK, who proposed a price 13.6% higher than the existing public tender offer price. Experts anticipate that both sides will use the counter tender offer and price increase cards at least once more. Korea Zinc also evaluated that securing at least the minimum purchase quantity proposed by the Youngpoong-MBK alliance is necessary to have a chance of success. The Youngpoong-MBK side is conducting the public tender offer until the 6th of next month, but considering that the 5th and 6th fall on the weekend, the effective deadline is the 4th. With the 1st (Armed Forces Day, a temporary holiday) and the 3rd (National Foundation Day) also being holidays, Chairman Choi Yoon-beom of Korea Zinc has only about three days to take action. The market expects Chairman Choi's side to announce a position on the last day of the public tender offer, the 4th of next month, with a higher price and larger volume than the Youngpoong-MBK alliance's offer. Although MBK has already raised the public tender offer price once, the possibility of further adjusting the purchase price and extending the public tender offer period cannot be ruled out. It is expected that they will decide their position after finally confirming the opponent's cards. Industry insiders speculate that Chairman Choi's side must propose at least 800,000 won as a counter public tender offer to have a chance of success. To defeat the MBK-Youngpoong alliance and succeed in the counter public tender offer, Korea Zinc needs to secure a stable stake of 11-12%. If the counter public tender offer is proposed at 800,000 won, about 2 trillion won in funds will be required. Korea Zinc is focusing on securing funds while emphasizing its status as a national key industry supporting the core axis of the secondary battery supply chain. Previously, Korea Zinc broke its traditional debt-free management policy and unusually issued commercial paper (CP) to secure 400 billion won. Following the issuance of 200 billion won worth of CP on the 24th, it plans to raise an additional 200 billion won through CP issuance on the 27th. Korea Zinc states that this CP issuance is a scheduled measure to secure operating funds, but the market views the funds as ammunition to defend management rights against the Youngpoong-MBK offensive. The industry is closely watching who will emerge as a white knight for Chairman Choi's side.
Will MBK and Youngpoong Play the Second Price Increase Card?
After Chairman Choi takes counter-purchase action, a scenario of MBK and Youngpoong raising the public tender offer price again is cautiously being raised. If Chairman Choi proposes 800,000 won as a bold move, MBK might also play the card of re-raising the public tender offer price. This would prolong the management rights dispute into a long-term battle. Since MBK has been meticulously preparing for the Korea Zinc public tender offer for a long time, it is believed that they have also considered the possibility of a price re-raise. However, the required funds in this case are expected to exceed 3 trillion won, which could lead to a 'winner's curse.' Accordingly, some speculate that the Youngpoong-MBK alliance might participate in Chairman Choi's counter public tender offer and sell their shares. A hedge fund CEO said, "If Chairman Choi proceeds with a counter public tender offer in the 800,000 won range, it is quite possible that Youngpoong and MBK will sell their shares," adding, "This means selling shares that were previously priced in the 500,000 won range at over 800,000 won." He expressed concern that "in this case, minority shareholders might not be able to sell all their shares," because if the tender offer quantity exceeds the maximum purchase quantity, the buyer purchases shares proportionally. Meanwhile, excluding Youngpoong Group and the Jang family (33.1%), Chairman Choi Yoon-beom and the Choi family (15.6%), the National Pension Service (7.8%), Hanwha Group (7.8%), Hyundai Motor Group (5.0%), LG Chem (1.9%), and treasury shares (2.4%), Korea Zinc's floating shares are estimated to be around 22-23% of the total issued shares.
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