Price is 5,000 Won (20%) Higher from Chairman Choi Yunbeom's Side, but Choi Family's Purchase Ratio is Limited 'Proportional Allocation', MBK Buys Entire Amount
The public tender offers by MBK Partners for Young Poong Precision, which holds a 1.85% stake in Korea Zinc, and the counter tender offer by Chairman Choi Yoon-beom of Korea Zinc have complicated the calculations for investors considering responding to the tender offers.
According to the business and financial investment sectors on the 2nd, the Choi family will begin a public tender offer from this day until the 21st to purchase 3,937,500 shares (25%) of Young Poong Precision at 30,000 KRW per share. Previously, the MBK alliance proposed a purchase price of 25,000 KRW per share during their public tender offer for Young Poong Precision shares, but Chairman Choi’s side offered 30,000 KRW, 5,000 KRW higher.
The issue lies in the proportion of shares to be purchased. The Choi family intends to acquire only 25% of the total issued shares, whereas MBK plans to purchase all shares tendered. If the number of shares tendered to Chairman Choi’s offer exceeds the target quantity, the shares will be purchased on a pro-rata basis (divided equally according to the ratio) up to the target amount.
If an investor holds 1,000 shares of Young Poong Precision and tenders all shares to MBK’s offer, they can sell 100% of their shares and receive 25 million KRW (excluding taxes and other costs).
On the other hand, if they tender all shares to Chairman Choi’s offer, theoretically, 57.6% can be sold at 30,000 KRW, but the remaining shares that cannot be sold will be held at the pre-tender offer price.
Assuming that the Young Poong Precision stock price reverts to the weighted arithmetic average price of 9,952 KRW over the previous three months (June 13 to September 12) before MBK’s tender offer announcement, the expected return from Chairman Choi’s tender offer would be approximately 21.5 million KRW. This is 14% lower than the expected return of 25 million KRW from MBK’s tender offer.
Unlike Korea Zinc, where most other shareholders are institutional investors, Young Poong Precision is known to have many individual investors holding shares. Its trading volume is also higher than Korea Zinc’s. Since tender offers are off-market transactions subject to capital gains tax, individual investors usually sell on the market, and institutions typically respond to tender offers aiming for arbitrage. MBK’s stance is to observe these movements rather than further increase the tender offer price for now.
Meanwhile, the Choi family currently holds a 35.45% stake in Young Poong Precision, including Chairman Choi Chang-gyu and Chairman Choi Yoon-beom. This is more than 10 percentage points higher than the 21.25% stake held by the Jang family, including Young Poong advisor Jang Hyung-jin.
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