Youngpoong and MBK public offering classified as ‘hostile M&A’
All outside directors of Korea Zinc announce their opposition to the public offering
“National key industries are being taken over by private equity funds seeking short-term profits”
MBK Partners, no experience in materials and batteries
“Concerns over the outflow of national core technologies and capabilities… damage to corporate value”
Damage and impact on Korea Zinc employees, stakeholders, and local communities↑
Korea Zinc announced on the 21st that all outside directors of the board of directors released a statement opposing the hostile takeover and merger (M&A) by private equity fund MBK.
Korea Zinc’s outside directors are comprised of a total of seven people, including Sung Yong-rak (former Secretary General of the Board of Audit and Inspection, current advisor at Pacific Law Firm), Kim Do-hyun (Chairman of the Korean Venture Startup Association, professor of business administration at Kookmin University), Kim Bo-young (non-executive director at Korea Gas Technology Corporation, professor of business administration at Hanyang University), Lee Min-ho (Director of the Environmental Policy Office at the Ministry of Environment, director of the ESG Research Institute at Yulchon Law Firm), Seo Dae-won (Vice Commissioner of the National Tax Service, chairman of BnH Tax Firm), Kwon Soon-beom (Chief Prosecutor, Managing Attorney at Sol Law Firm), and Hwang Deok-nam (Secretary to the President for Legal Affairs under the Roh Moo-hyun administration, judge at Seoul High Court, and chairman of the ESG Committee at Lotte Welfood). The members include experts from various fields, including university professors, administration, environment, law, and finance.
In their statement, these outside directors of Korea Zinc unanimously stated that they were opposed to the public offering of Korea Zinc stocks by Youngpoong Co., Ltd. and the private equity fund. In particular, they emphasized that this public offering was a hostile M&A by the private equity fund targeting Korea Zinc. They expressed concern that this offensive would significantly damage the corporate value of Korea Zinc, which has the world’s No. 1 competitiveness in the nonferrous metal sector, a key national industry, and is emerging as a key company in the battery supply chain raw materials.
Regarding the current management of Korea Zinc, it was reported that they have been actively accepting the monitoring and checks of outside directors and have been implementing sound management. The outside directors of Korea Zinc evaluated that “they have long led the national key industry to sustainable growth and are faithfully fulfilling their responsibilities and obligations that are in line with stakeholder expectations and values.” In terms of business, they explained that they have laid the foundation for sustainable growth based on a long-term perspective and global network in areas ranging from non-ferrous metals to resource recycling and battery supply chain raw materials. In addition, they highly evaluated the efforts to secure future growth engines in line with government policies, not being satisfied with being the world’s number one in the non-ferrous metals sector.
He strongly criticized Youngpoong for joining hands with private equity fund MBK Partners for a hostile M&A. He said that Youngpoong Seokpo Smelter has no independent survival ability due to ESG risks and large deficits, and that it is a company that relies on Korea Zinc’s competitiveness and dividends. He pointed out that the company’s operation is in a serious state as both CEOs were arrested due to a recent major accident involving the death of an employee, leading to the absence of an internal director, and the company lost the first and second trials of a lawsuit to cancel the suspension of business from the Ministry of Environment due to an environmental pollution accident.
Regarding MBK Partners, it was defined as speculative capital that only pursues short-term profits. Therefore, it was emphasized that there is a concern that national core technologies and capabilities may leak overseas. It was explained that due to the nature of private equity funds, they cannot help but focus only on short-term corporate value enhancement through core asset sales and personnel restructuring rather than mid- to long-term growth of the company, and if such a private equity fund takes over the management rights of Korea Zinc, Korea Zinc members, local communities, and stakeholders will be exposed to an environment where they can suffer serious damage. Some also pointed out that MBK Partners lacks manufacturing experience in the battery and materials sectors as a disadvantage.
The outside directors of Korea Zinc said, “We will monitor and support the current management of Korea Zinc to increase shareholder value through various shareholder return policies from the perspective of protecting shareholder interests, Korea Zinc members, the local community economy, and the environment.” They added, “We must protect national companies that must grow for the benefit of all shareholders, including minority shareholders, from speculative capital.”
Kim Min-beom, Donga.com reporter [email protected]
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2024-09-22 01:17:30