A private equity firm, MBK Partners, and shareholder Young Poong submitted a bid to purchase a majority stake in Korea Zinc, a move the smelting company called a “hostile takeover.” | Pavel Kapysh/Shutterstock
Top executives at South Korean smelting giant Korea Zinc are locked in a battle with a private equity firm that wants to seize control of the company. As the fight has spilled into the public arena, the equity firm has attacked the company’s recent business decisions, including its purchase of U.S.-based processor Igneo Holdings.
In early September, shareholder Young Poong and private equity firm MBK Partners submitted a bid to purchase a majority stake in Korea Zinc, a Seoul-based publicly traded smelting firm. In a statement, Korea Zinc management described the move as a “hostile takeover” and said it would “conflict with the interests of Korea Zinc’s long-term growth.”
“Upon the unanticipated tender offer of Young Poong, a shareholder of the Company, together with a private equity fund, we rigorously deliberated on the offer from the standpoint of shareholder interests,” management said in the press release. “Our conclusion is that we unanimously and emphatically object to the uninvited offer.”
In response, the equity firm held a press conference publicly blasting Korea Zinc over several key decisions company management has made over the past few years. Among those decisions was the company’s move to “acquire the fully capital-impaired Igneo Holdings at 580 billion won,” MBK noted in a public report, according to the Korea Times. The price equated to $332 million, E-Scrap News reported at the time.
The company in 2022 began acquiring a stake in Igneo, which owns e-scrap operations in the U.S. and Europe. It acquired the remaining shares, securing a 100% stake, in 2023. The company’s U.S. e-scrap holdings, housed under the name Pedalpoint Holdings, include evTerra, which has processing plants in Atlanta, Chicago, Las Vegas and San Antonio. The company “was in a state of complete capital impairment,” the Korea Times reported. MBK alleged the purchase price was 203 times Igneo’s revenue. But Korea Zinc strongly defended its purchase in a September document posted to its website. It called MBK’s assertion that Korea Zinc overpaid for Igneo “another distortion of facts.”
“When Korea Zinc acquired Igneo, we also acquired the trading assets of Igneo’s former shareholders,” the company wrote. “Young Poong and MBK excluded these figures to falsely portray the investment as a failure.
“Korea Zinc acquired Igneo Holdings, LLC, through its U.S. subsidiary in 2022, determining a fair value based on a corporate valuation report prepared by a global investment bank,” the company added. “This transaction was completed following negotiations with the seller and sound business judgment.”
Korea Zinc added that the valuation MBK used in its attack was based on an outdated financial disclosure, and presented alternative figures showing the purchase price was only nine times Igneo’s revenue, “a reasonable valuation multiple.”
Furthermore, the company noted that Pedalpoint, the U.S. company that oversees evTerra, saw its revenue grow from $25.1 million at the end of 2022 up to $61.8 million by the end of 2023. Korea Zinc claimed Pedalpoint’s revenue was expected to reach $436.9 million by the first half of 2024, “primarily due to the acquisition of Kataman Metals.”
Based in St. Louis, Kataman Metals was acquired by Pedalpoint in April for $55 million, a move the smelting giant said would increase vertical integration within the company.
“This additional acquisition has been evaluated by the market as another step in enhancing the company’s value chain, connecting Kataman Metals’ raw material procurement, Igneo’s e-waste processing technology and Korea Zinc’s manufacturing capabilities for the final product,” Pedalpoint stated in announcing the purchase.
At the time, Pedalpoint also said it would “focus on stabilizing Igneo Holdings’ business in 2024 and integrating Kataman Metals as a subsidiary, as well as enhancing synergy between the businesses, to achieve a break-even” and reaching $1.5 billion in sales with positive profit within the year.
Pedalpoint CEO responds
In a statement to E-Scrap News, Pedalpoint CEO Mark Pope said the media reports by MBK and Young Poong are “incredibly false and self serving.” The public attack by the shareholder and equity firm “denies the hard work of 120 U.S. citizens that are working to secure a strong future,” he said, referring to the company’s employees.
“Our investment in Igneo Holdings is a strategically crucial step for Korea Zinc, playing a key role in advancing our future growth,” Pope added. “Igneo provides us with a competitive edge through its robust network for securing electronic waste raw materials in major markets such as the U.S. and Europe, as well as its advanced pre-processing capabilities for producing intermediary products.”
Beyond securing a reliable supply of raw materials, the Igneo acquisition “opens doors for us to expand into new areas like solar panel and battery recycling,” Pope added.
“This investment is foundational to our mission of producing copper from recycled sources and extends into the recycling of other critical non-ferrous metals such as silver, nickel, and cobalt,” he said. “By integrating Igneo’s capabilities, we are creating synergies across all areas of our business, positioning Korea Zinc as a leader in sustainable metal production and resource recycling for the future.”