Proxy Battle for $11 Billion Korea Metals Giant Reaches Climax

The battle for control of Korea Zinc Co., the world's largest zinc smelter, is set to reach its climax as shareholders gather for an extraordinary general meeting on January 23, 2025. The proxy fight between the alliance of MBK Partners and Young Poong Group, and Korea Zinc Chairman Choi Yoon-beom has captivated headlines and driven the company's stock price to record highs.

The stock price rally, driven by aggressive share purchases by both sides and mounting tensions ahead of the proxy fight, has seen Korea Zinc's shares surge for the eighth consecutive trading day. The company's market capitalization has risen to 41.41 trillion won, making it Korea's sixth-largest company and closing the gap with Hyundai Motor to just over 1 trillion won.

The battle for control of Korea Zinc's boardroom is a key agenda item at the upcoming shareholders' meeting. The MBK-Young Poong coalition, which holds a larger stake in the company, is expected to gain control of the boardroom through statutory voting, as the court's ruling prohibits the use of cumulative voting. This ruling favors the MBK-Young Poong coalition, which holds a 40.97 percent stake in Korea Zinc, compared to Choi's 34.24 percent.

The MBK-Young Poong alliance has vowed to improve corporate governance at Korea Zinc, striking at the heart of the issue of transparency that has made global funds wary when investing in South Korea. However, Choi has criticized the move as "predatory M&A" and raised concerns that the firm could be torn to pieces and sold off to China.

The outcome of the proxy battle will have significant implications for the company's strategic direction and shareholder value. If the MBK-Young Poong alliance wins, they plan to diversify Korea Zinc's business into the green economy, focusing on energy-transition metals like zinc, lead, and silver. This aligns with global trends and could secure the company's long-term growth and competitiveness. However, if Choi retains control, he is likely to maintain the company's focus on its traditional non-ferrous metals refining business, which may limit growth potential in the long run.

The battle and its aftermath have already led to separate negotiations with suppliers and clients, with both sides seeking support. This could potentially disrupt long-standing agreements and supply chains, affecting the company's ability to operate efficiently. The outcome of the proxy fight could also have significant implications for shareholder value, as the MBK alliance has vowed to improve corporate governance and potentially increase shareholder returns, while Choi has warned of supply disruptions for South Korea's key industries if MBK takes control.

In conclusion, the proxy battle for control of Korea Zinc Co. is set to reach its climax, with significant implications for the company's strategic direction, governance, and shareholder value. The outcome of the proxy fight will determine the future of this $11 billion metals giant and its impact on the global supply of energy-transition metals.