Korea Zinc Teams Up With Bain Capital to Thwart Takeover Bid

By Kwanwoo Jun

Korea Zinc has teamed up with U.S. private-equity firm Bain Capital to thwart what it calls a hostile takeover by South Korean investment company MBK Partners.

The world's largest zinc smelter said in a statement Wednesday that it will buy back shares worth 2.663 trillion won, equivalent to $2.01 billion, for cancellation, while partner Bain Capital will separately buy around 430 billion won of shares from the market for a 2.5% stake.

The planned stock repurchase by Korea Zinc, which will run for 20 days from Friday to secure an additional 15.5% stake in the company, aims to frustrate a "hostile merger and acquisition" bid by MBK Partners, a homegrown private-equity firm backed by Korea Zinc shareholder Young Poong, according to the statement.

Korea Zinc, currently led by Yun B. Choi, chairman and grandson of the co-founder, plans to buy back shares at 830,000 won apiece, 11% higher than MBK's raised offer of 750,000 won. Shares of the Seoul-based nonferrous-metal producer ended 3.6% higher at 713,000 won on Wednesday as the fight over management control intensified.

MBK declined to comment on the Korea Zinc-Bain Capital alliance.

Korea Zinc said it could spend more on the share buyback, if needed, in order to stop the MBK-led takeover attempt.

MBK, one of Asia's largest private-equity firms with more than $30 billion in assets under management, is seeking to amass a controlling stake of up to 47.7% of Korea Zinc, including Young Poong's 33% stake, with a tender offer valued at around $1.70 billion in total.

Michael ByungJu Kim of MBK, which owns a handful of Chinese companies and has a small contingent of Chinese investors, has pledged to not sell Korea Zinc to the Chinese, as the takeover bid stoked local fears that the smelter could one day fall into China's hands.

Write to Kwanwoo Jun at kwanwoo.jun@wsj.com

(END) Dow Jones Newswires

October 02, 2024 06:46 ET (10:46 GMT)

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