Private equity firm MBK, Young Poong raise Korea Zinc tender offer to $1.88 bln
Korea Zinc shares jump to record high
MBK, Young Poong raise price to match Korea Zinc buyback offer
Offer deadline extended to Oct 14
Battle for No.1 zinc maker comes amid supply chain concerns, US-China trade tensions
Recasts with higher offer, updates shares, adds detail on Australian investment
By Heekyong Yang and Joyce Lee
SEOUL, Oct 4 (Reuters) -Private equity firm MBK Partners and Young Poong 000670.KS on Friday raised their tender offer price for shares in Korea Zinc 010130.KS to match a counteroffer, as a takeover battle heats up for the world's biggest refined zinc producer.
The new tender offer, valued at 2.51 trillion won ($1.88 billion), has an extended deadline to Oct 14.
Run by the Choi family, Korea Zinc has been in a bitter battle for control of the $12 billion zinc empire with the co-founding Chang family, whose electronics conglomerate Young Poong made an initial joint offer with MBK in September.
Each side in combination with their likely supporters holds about a one-third stake in Korea Zinc, according to calculations by Meritz Securities. The two groups have declined to comment.
Both have tendered offers to minority investors to gain control, with Korea Zinc on Wednesday announcing an offer now matched by Young Poong and MBK.
The fight has gained global attention because Korea Zinc supplies raw materials for a slew of cutting-edge industries such as semiconductors and electric vehicle batteries. Concerns over securing supply chain control are also mounting amid heightened U.S.-China trade tensions.
Korea Zinc shares closed up 8.8% after rising as much as 10.9% to a record high of 791,000 won on Friday after the announcement, still holding lower than the latest tender offers of 830,000 won per share. South Korea's wider market .KS11 closed up 0.3% higher.
This was the second time MBK and Young Poong raised their offer price after the original tender in September. Their offer on Friday matched Korea Zinc's rival offer of 830,000 won per share.
Korea Zinc planned to buy back about 2.7 trillion won ($2.02 billion) of shares alongside Bain Capital, which offered to buy another 430 billion won of shares. That offer closes on Oct. 23.
Both groups competing for Korea Zinc - whose customers include metals traders Glencore GLEN.L, Trafigura and Sumitomo 8053.T - said on Friday they would buy shares even if the amount fell short of their target stakes.
Young Poong has said its offer was aimed at participating in Korea Zinc's management and improving its governance.
CORE NATIONAL TECHNOLOGY
The battle for control comes at a crucial time for South Korea, which is trying to implement corporate governance reforms to give a boost to capital markets that have long been stymied by the influence exerted by sprawling conglomerates.
Minority shareholders, who owned about 27% of Korea Zinc as of end-June according to a company filing, will play a crucial role in determining the outcome of the takeover battle.
South Korea's National Pension Service, a long-term investor that holds a separate 7%, did not respond to a request for comment on its plans.
Korea Zinc last month asked the South Korean government to designate its battery component technology as a national core technology that would require government approval for a foreign acquisition to proceed. South Korea's industry ministry is set to hold a meeting on Friday.
The United States and its allies are seeking to reduce reliance on China for critical metals.
"There are concerns that this takeover by a venture capital firm may be a precursor to an on-sale to majority Chinese interests," said Ian Satchwell, an adjunct professor at the University of Queensland's Sustainable Minerals Institute.
MBK and Young Poong said last month they had no plans to sell Korea Zinc to China.
A joint venture set up by Korea Zinc and LG Chem 051910.KS in South Korea is set to produce precursors, a key EV battery material. Precursors produced by the joint venture will be used in LG Chem's cathode plant in the U.S. that is slated to start mass production in 2026 to supply EV battery cathodes to General Motors GM.N.
Korea Zinc has also been looking at other areas overseas, including in Australia where it owns renewable energy and hydrogen company Ark Energy.
Michael Choi, CEO of Ark Energy, told local media in September its investment plans would be "torn apart" under new owners.
The premier of Queensland state, where Ark Energy's green hydrogen facility will be based, has urged Australian Prime Minister Anthony Albanese to use foreign investment review powers to protect local jobs, local media reported.
($1 = 1,333.7000 won)
Reporting by Joyce Lee, Jihoon Lee and Heekyong Yang in Seoul and Lewis Jackson in Sydney; Editing by Ed Davies, Jamie Freed and Tom Hogue
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