Yeongpung·MBK Abruptly Raise Public Tender Offer Price for Korea Zinc to 750,000 Won per Share (Comprehensive)

Price Hike of 13.6% on Last Day Without Extension of Trading Days
Korea Zinc's Price 11.6% Higher Than All-Time High Since Listing
Youngpoong Precision Tender Offer Price Up 25% from 20,000 to 25,000 Won per Share

MBK Partners (hereinafter MBK) and Youngpoong have abruptly raised the tender offer price for Korea Zinc. Without extending the tender offer period, they proposed an additional premium of 13.6% on top of the previous premium price to existing investors on the last day when price adjustments were possible. MBK is also putting full effort into the tender offer by raising the tender offer price for Youngpoong Precision, which it is conducting independently.

On the 26th, MBK and Youngpoong submitted an amended report to the Financial Supervisory Service to raise the tender offer price for Korea Zinc from KRW 660,000 per share to KRW 750,000 per share. The tender offer price for Youngpoong Precision was also raised by 25%, from KRW 20,000 per share to KRW 25,000 per share.

The increased tender offer price of KRW 750,000 for Korea Zinc is 11.6% higher than the all-time high of KRW 672,000 since its listing. It applies a premium of 45.1% and 50.5% over the volume-weighted average prices for the three and six months prior to the initial tender offer date (KRW 516,735 and KRW 498,368, respectively). It is 34.9% higher than the closing price of KRW 556,000 twelve days before the tender offer and 34.6% higher than the 52-week high closing price of KRW 557,000.

The minimum planned purchase quantity for the Korea Zinc tender offer by MBK and Youngpoong is 1,445,036 shares (approximately 7% of the total issued shares), and the maximum purchase quantity is 3,024,881 shares (approximately 14.6% of the total issued shares). If the number of shares tendered is less than the minimum planned purchase quantity, not all tendered shares will be purchased. If the number exceeds the maximum planned purchase quantity, only the maximum planned purchase quantity will be purchased on a pro-rata basis.

In the case of Youngpoong Precision, there is no minimum condition for the tender offer target shares, and all shares tendered within the maximum limit of 6,840,801 shares (approximately 43.43% of the total issued shares) will be purchased. Regarding the dramatic increase in tender offer prices by MBK and Youngpoong, the securities industry analyzed that "if existing investors participate in the tender offer, it is expected to be an excellent opportunity to realize sufficient trading profits."

Moreover, since most of the other shareholders of Korea Zinc are institutional investors, it is expected that they are highly likely to participate in this tender offer, which guarantees a definite profit realization. During the six trading days from the 13th to the 25th, more than 60% of Korea Zinc stock purchases were made by individuals, indicating that conservative institutional investors did not actively buy at prices above the initial tender offer price.

MBK and Youngpoong explained the reason for pursuing the tender offer as acquiring additional shares through the tender offer on the 13th to solidify management control and improve Korea Zinc’s governance and corporate value, which had been damaged due to typical 'Agency Problems.' On the 25th, the Korea Corporate Governance Forum commented under the title "Korea Zinc Tender Offer Helps Capital Market Development," stating that "since Chairman Choi Yoon-beom took office as CEO in 2019, profitability has deteriorated and borrowings have increased, failing to enhance corporate value," and "despite recent shareholder-friendly actions, the stock price has not gained momentum due to concerns over increased financial debt, aggressive investment plans, and governance."

The global independent investment research platform Smartkarma also evaluated in a research note on Korea Zinc’s management on the 20th that MBK Partners’ concerns were valid, citing poor investments such as the Won Asia Partners investment, worsening profitability, third-party allotment rights issues, and increased floating shares due to treasury stock exchanges. Meanwhile, Korea Zinc shareholders and Youngpoong Precision shareholders can participate in the tender offer through NH Investment & Securities branches, the website, Home Trading System (HTS), or Mobile Trading System (MTS) until October 4.

This content was produced with the assistance of AI translation services.