Shares of Korea Zinc surged 30 percent on Thursday, reaching a record high following the conclusion of its tender offer for shares amid a takeover bid from private equity firms MBK and Young Poong.
About the Company
Korea Zinc Company Ltd is a prominent non-ferrous metal smelter based in Seoul, South Korea, founded in 1974 by Choi Ki-ho and Chang Byung-hee. It is recognized as one of the largest refined zinc producers globally, alongside companies like Nyrstar and Hindustan Zinc.
The company specialises in producing a variety of metals and chemical products, including zinc, lead, gold, silver, and sulfuric acid, with an annual production capacity of 650,000 tons of zinc and 420,000 tons of lead
Price Movement
Korea Zinc Company Ltd’s shares soared 30 percent during Thursday’s trading session, climbing to 1,138,000 KRW (Korean won) from a previous close of 876,000 KRW. Over the past six months, the stock has generated impressive returns of over 150 percent.
Rationale for the Rise
Shares of Korea Zinc Co. rose 30 percent on Thursday as investors waited for news about the stock buyback started by Chairman Choi Yun-beom. This buyback is meant to defend the world’s biggest zinc smelter from a takeover offer worth 12.5 trillion Korean won.
Choi, with backing from Bain Capital, intends to buy back up to 20 percent of the company’s shares to challenge an offer from Young Poong Corp., its largest shareholder, supported by MBK Partners. This earlier offer, at 830,000 won per share, expired last week, increasing Young Poong’s stake to over 38 percent.
Before the buyback, Choi had the support of about 34 percent of shareholders. Since Young Poong and MBK made their offer in mid-September, Korea Zinc shares have more than doubled in value.
Kim Dojoon, chief investment officer and CEO of Zian Investment Management, commented, “The current price is not sustainable. The stock is no longer a solid investment; it’s become more about speculation.”
Financial Performance
In its latest financial update, the company reported remarkable net sales of 3,058,166,231 Million Korean Won in the quarter ended June 2024, reflecting a 24 percent YoY increase from 2,469,446,434.79 Million Korean Won in the quarter ended June 2023. Moreover, EPS (Earning Per Share) surged to 8.53k Korean won, compared to 6.07k Korean won in the same period.
Written by – Siddesh S Raskar
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