Happy Monday. Here’s what we’ve got today…

• A look at the fight for control of Korea Zinc

• Plus, Apollo’s $3.6 billion aerospace deal

Private equity takes sides in family feud:

Korea Zinc Co., the world's largest zinc smelter, has partnered with Bain Capital to thwart what it deems a hostile takeover attempt by South Korean investment firm MBK Partners.

Last month, MBK Partners and Young Poong Corp., Korea Zinc's largest shareholder, launched a surprise tender offer in a bid to boost Young Poong's existing 33 percent holding into a controlling stake in the company.

Young Poong was formed in 1949 as a trading company by the Chang and Choi families, eventually growing into one of Korea's largest chaebols, or industrial conglomerates. Its expansion included a push into metals smelting in the 1970s, which led to the founding of Korea Zinc, left to the Choi family to manage.

Both families, each among Korea's richest, are still involved in the two businesses: Korea Zinc's chairman is Choi Yun-beom, the grandson of one of the original founders, while Young Poong is now controlled by the Chang family.

Relations have soured considerably in the 75 years since the group's founding.

Appointed in 2022, the current Choi scion has championed a bet-the-company vision on the green energy transition. His plan involves significant upfront investment to build out the business' battery materials capabilities, diversifying away from its core zinc focus.

Young Poong and the Chang family have consistently pushed back on the transformation agenda and have made clear their preference for the status quo continuation of Korea Zinc’s ample dividend payouts.

The nature of Choi's project financing decisions has also become a sticking point. Much of the upfront investment has been made possible through a series of agreements struck with large corporates, including Hyundai Motor Group, LG Chem, and Trafigura Group. As part of those deals, Korea Zinc has completed a series of new share issuances and brought on a range of new (and influential) minority investors.

To the Chang family, such agreements are problematic not only because of their strategic direction, but also because they believe that Choi is seizing an opportunity to dilute their stake while bringing on self-aligned investors that tighten his hold on the business.

Tensions have flared for months, and came to a head in September when Young Poong went public with the MBK Partners bid.

In response, Korea Zinc brought in Bain Capital last week to assist in its takeover defense. In a regulatory filing on Wednesday, the pair announced a tender offer at a 10.7 percent premium to MBK's then-outstanding offer (an $11.6 billion valuation) with plans to repurchase and cancel around $2 billion worth of shares.

Bain is separately acquiring around $326 million worth of shares from the market for a 2.5 percent stake. In all, the strategy is targeting an additional 15.5 percent of the company's equity—with a commitment to spend even more, if necessary, to thwart MBK.

On Friday, MBK responded by sweetening its proposal, the second time in a month, to match the terms offered by Korea Zinc. The firm also extended the offer's timeline, pushing back the previous October 4 deadline to October 14.

Adding another layer of complexity are the geopolitical undertones of the deal. MBK, which has investments in various Chinese companies and counts Chinese investors among its LPs, has stoked speculation—vigorously amplified through Korea Zinc's PR efforts—that MBK will sell the company for parts to Chinese buyers.

“For the sake of our nation, our people, and our shareholders, we have to prevent our technology from being sold to China,” Korea Zinc’s vice chair Lee Je-jung told reporters last week.

“I deeply apologize for causing so much worry to our shareholders, employees, suppliers, and the people of Korea,” echoed Choi in his buyback announcement.

“However, this war facing Korea was not of our choosing. Our company and its employees can and must use this crisis as an opportunity for new changes and leaps forward,” Choi added.

MBK denies these claims.

Founder Michael Byung Ju Kim, a former Carlyle dealmaker, has publicly committed to “keep the company for a long time."

“We have plans for the next 10 years,” he added. MBK maintains that its primary goal is to improve corporate governance at Korea Zinc.

Speaking with The Financial Times, MBK partner Jeonghwan Kim blamed Choi for poor stewardship of the business, citing as an example a multimillion-dollar investment made by Choi without board approval into funds operated by a close school friend who is currently standing trial on stock manipulation charges.

According to data from Bloomberg, Korea Zinc accounts for 12 percent of the world's zinc production outside China, 5 percent of its lead, and around 9 percent of its silver.

Young Poong has been working to reassure Korea Zinc clients that any takeover would have minimal impact on existing supplier agreements, some of which are decades old. Korea Zinc has, however, sounded the alarm against potential supply disruptions across key industries as a result of what it's calling an attack from "corporate raiders."

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