This picture shows Korea Zinc's headquarters in Jongno District, Seoul, Oct. 11. Yonhap
The government has designated Korea Zinc's high-nickel precursor manufacturing process as a national core technology amid a tussle for control of the world's biggest refined zinc producer, the company said Monday.
Korea Zinc has been in a monthslong battle to fend off a takeover bid by its largest shareholder Young Poong Corp. and private equity fund MBK Partners The Young Poong side initiated the takeover battle on Sept. 13 by launching a tender offer for an additional stake in Korea Zinc.
In response, Korea Zinc conducted a massive stock buyback and asked the government to add its high-nickel precursor technology to the list of national core and high-tech strategic technologies, a company spokesperson said by phone.
Companies with such designation require government approval in case of an acquisition by a foreign company, safeguarding them for economic and security reasons.
Both Korea Zinc and Young Poong welcomed the government's decision.
"The government officially acknowledged that any technology leaks (involving Korea Zinc's high-nickel precursor processing) to foreign entities would have a significant adverse effect on the Korean economy," Korea Zinc said in a statement.
Young Poong said it, as the largest shareholder, will keep the smelter's core technologies from being leaked to overseas companies.
The designation by the industry ministry came days after Korea Zinc scrapped its 2.5 trillion-won ($1.8 billion) share sale plan taken issue with by the Financial Supervisory Service. The regulator cited a lack of details in the decision-making process could damage the interests of existing shareholders.
The rights issue plan was widely seen as part of Korea Zinc's efforts to secure more treasury stocks with voting rights to win the takeover battle with the Young Poong camp.
Currently, Young Poong and MBK collectively own a 39.83 percent stake in Korea Zinc, while Korea Zinc Chairman Choi Yun-beom and related parties hold a 35.4 percent stake in the smelter.
Korea Zinc, with the support of Bain Capital, plans to hold a shareholders meeting within this year to end the battle, with focus on drumming up support from institutional investors, including the National Pension Service and small shareholders.
Korea Zinc is widely expected to use its status funded by the state to protect vital industries to garner further support at the shareholders meeting.
High-nickel precursors are crucial in the manufacturing of battery cathodes, which are essential for electric vehicles and energy storage systems. (Yonhap)
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