2024-12-30
(The Korea Herald, Dec. 30)
Whether private equity firm MBK Partners’ bid to acquire Korea Zinc would be deemed a foreign investment has emerged as a decisive factor in the monthslong battle for management control of the world’s largest zinc smelter.
Korea Zinc has been in a tussle to fend off a takeover bid by a coalition of its largest shareholder, Young Poong, and MBK Partners.
In a defensive maneuver, Korea Zinc sought and was granted approval from the government on Nov. 18 to add its high-nickel precursor technology to the list of national core and high-tech strategic technologies.
National core technology status refers to technologies with high technical and economic value in domestic and foreign markets or those that may have serious consequences on national security when transferred to another country.
The core and strategic technologies designation gives the government approval rights in case of an acquisition of Korea Zinc by a foreign company due to potential security threats.
Against this backdrop, the chance of governmental intervention in MBK’s acquisition of Korea Zinc has heightened because of the private equity fund’s ambiguous nationality status.
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| MBK Partners Chair Michael Byung-ju Kim (MBK Partners) |
MBK is registered as a Korean entity, but its main management team consists of foreign nationals, including Chair Michael Byung-ju Kim, which could lead to the application of the “foreign investment” provisions of the Act on Prevention of Divulgence and Protection of Industrial Technology and the Act on Special Measures to Strengthen Competitiveness and Stabilize Supply Chain of Materials, Components, and Equipment Industry.
The acts require stricter investment screening of foreign investments into companies with national core and strategic technologies, as prescribed in the National Core Technology list.
The MBK chairman, a US citizen, exercises the final decision on all investment matters and holds the right to veto as the chair of MBK’s Investment Review Committee decision-making body. In addition, over 80 percent of the funds raised by MBK to finance the acquisition of Korea Zinc is allegedly composed of foreign funds.
In the United States, where capital market-related systems such as private equity funds are more developed than in Korea, corporations in which foreigners exercise dominant influence, such as MBK, are classified as “foreigners.”
“Experts believe that if foreign control is clearly evident in the composition of shareholders, management participation and policymaking authority, as in MBK, it is highly likely that the company will be classified as a foreign-controlled company,” a Korea Zinc official said.
