Korea Zinc Chairman Choi Yun-beom, left, and Young Poong adviser Chang Hyung-jin / Courtesy of each company

Shares of Young Poong Precision Corp., a much-undervalued subsidiary of Korea Zinc with nearly 2 percent of stakes in the non-ferrous metal smelter, hit the intraday upper circuit limit of 30 percent for the third consecutive session, Friday, underpinned by strong investor expectations of a sustained further spike. It ended at 20,550 won ($15).

Propelling the optimism is the ongoing tender offer for Korea Zinc shares, engineered jointly by Young Poong, the largest shareholder of the zinc smelter, and MBK, a private equity firm. Young Poong advisor Chang Hyung-jin initiated the buyout, Sept. 12, to take control of Korea Zinc, enraged by zinc smelter chair Choi Yun-beom's two-year efforts to increase stakes in the firm in a move to cement independence from Chang.

The joint force's tender offer of over 2.1 trillion won seeks to secure up to a 14.6 percent stake in Korea Zinc and up to a 43.43 percent stake in the precision subsidiary.

A successful tender offer for the precision subsidiary will win them 1.85 percent of Korea Zinc at a price of 129 billion won, saving them 86.9 billion won compared to the market price of 215.8 billion won.

It is also an easier and faster option, given uncertainty about retail shareholders with a combined Korea Zinc stakes of 26 percent and National Pension Service' stakes of 7.6 percent.

Kim Kwang-il, center, a partner at MBK Partners, speaks during a press conference at Lotte Hotel Seoul, Thursday. Yonhap

Win at all costs

“I am confident that we will emerge victorious in this fight,” Korea Zinc chair said in a letter to the firm employees, Thursday.

The message followed the six-day Chuseok holidays – a period of what he described as tireless work by himself and the entire firm.

The MBK-Chang alliance had prepared for the hostile takeover bid for a while, in his view, to make a sudden announcement right before the Chuseok holiday, and Friday, no less.

“They might have thought the crippling blow left us helpless. However, at the end of the day, it ended up as a deadly mistake for them,” he said.

“We were able to pinpoint their mistakes and weaknesses, a process that I am certain will lead us to victory. I have formulated a plan with the help and encouragements of many for whom I feel eternally grateful. I am sure I will win this.”

The chair fell short of fully disclosing the plan.

However, market watchers say he would elicit the help of SoftBank CEO Masayoshi Son for a counter-tender offer.

According to a local media outlet, Choi left for Tokyo, Tuesday, for a meeting with SoftBank head as well as leading Japanese firm CEOs with whom Korea Zinc has built a strong business partnership.

Many believe that Choi's confidence resulted from his ability to leverage mutual interests with Son, as exemplified by Korea Zinc's investment of $50 million in Energy Vault, a Lugano-headquartered Swiss gravity and kinetic energy firm backed by SoftBank.

The SoftBank participation will derail the MBK-Chang alliance, sending the precision subsidiary shares soaring.

Also at play is a potential support from large conglomerates with stakes in Korea Zinc, including Hanwha, Hyundai Motors and LG Chem.

Meanwhile, Friday's development is the latest in the escalating feud between the heirs of Young Poong Group. The group was co-founded by Chang Byung-hee and Choi Ki-ho in 1949. The Chang family has since managed the group and its electronics affiliates, while the Choi family has operated Korea Zinc.

Korea Zinc shares closed at 735,000 won, Friday, far above the MBK's tender offer price of 660,000 won.

Young Poong shares ended at 570,000 won, nearly doubling from the previous low of 297,000 won, Sept. 12.