Korea Zinc Inc. has successfully taken control of Young Poong Precision Corp., a pivotal player in its ongoing management battle with MBK Partners Ltd., a private equity firm focused on North Asia, according to the KED Global. This victory was achieved through a tender offer led by Jerico Partners Co., a company established by Korea Zinc’s Chairman Choi Yun-birm and his family. According to KB Securities Co., which managed the tender offer, Jerico Partners secured a 34.9% stake in Young Poong Precision, representing approximately 5.49 million shares, as of Monday. This acquisition has increased the combined stake held by the Choi family in Young Poong Precision to 70.35%, further consolidating their influence in the company.

Young Poong Precision’s strategic importance stems from its 1.85% stake in Korea Zinc, the world's largest zinc and lead smelter. In the ongoing management dispute, this stake serves as a crucial casting vote. If MBK Partners had succeeded in gaining control of Young Poong Precision, it could have secured a 3.7% voting stake in Korea Zinc, a significant advantage in the power struggle between the two parties. However, MBK’s tender offer for Young Poong Precision, which concluded on October 14, resulted in only a minimal acquisition of 0.01%, or just 830 shares, a far cry from the influence it was aiming for.

Korea Zinc’s success in the tender offer can be attributed to its strategic decision to raise its offer price. Initially, Korea Zinc offered 30,000 won per share for Young Poong Precision but later increased the price to 35,000 won ($25.4) per share, significantly improving the offer. In contrast, MBK Partners maintained its original offer of 30,000 won per share, which ultimately proved less attractive to shareholders. This move by Korea Zinc was pivotal in securing the necessary support from shareholders and strengthening its hold on Young Poong Precision.

Following the completion of both tender offers, the stock price of Young Poong Precision saw a sharp decline. The company’s shares fell by 17.5%, closing at 20,500 won on South Korea’s junior Kosdaq market. On Tuesday, the stock price dropped further to 20,300 won, marking its lowest point since September 23. This decline reflects the market’s reaction to the resolution of the tender offers and the shifting dynamics between the competing stakeholders.

Despite Korea Zinc’s successful tender offer, MBK Partners’ broader goal of gaining control of Korea Zinc may not be significantly affected in the long term. According to KED Global, MBK and Young Poong Corp., Korea Zinc’s largest shareholder, have already secured a substantial stake in Korea Zinc through a separate tender offer. This suggests that while Korea Zinc’s acquisition of a larger stake in Young Poong Precision strengthens its position, MBK still maintains considerable leverage in its pursuit of control over Korea Zinc.

The outcome of this management battle remains uncertain, but Korea Zinc’s latest move highlights the intense competition between the two factions and their determination to secure a controlling interest in one of the world’s largest zinc and lead producers.