On the 27th, the Unicorn Management and Economics Research Institute held an expert roundtable on the theme of "hostile M&A and board defense rights."
At the roundtable were Yoo Hyo-sang, head of the Unicorn Management and Economics Research Institute, Lee Dong-hyun, a professor in the Department of Business Administration at Catholic University, and Kim Hee-kyung, managing attorney at Law Firm Doyoung, among others. The participants analyzed, from management and legal perspectives, the criteria for determining hostile mergers and acquisitions (M&A) and the need for board defense rights, focusing on the Korea Zinc management control dispute.
Director Yoo Hyo-sang assessed the Korea Zinc case as a representative example showing the importance of board defense rights in Korea's capital market. Yoo said, "Hostile M&A should be judged not simply by whether a merger is concluded, but by whether there is an attempt to secure actual management control."
Yoo said, "In global capital markets, it is common in the M&A process to go through preliminary consultation stages such as an "Indicative Offer" or a "Bear Hug,"" adding, "The fact that MBK Partners and Young Poong launched a tender offer without prior discussions with the Korea Zinc board means it constitutes a hostile acquisition even by international market standards."
Professor Lee Dong-hyun explained from a management perspective that "the key criterion for whether an acquisition is hostile is board consent rather than equity ratio." He assessed it as a textbook case of a hostile M&A, given that the Korea Zinc board expressed opposition to the tender offer.
Lee also noted that a private equity-centered acquisition structure could skew toward maximizing short-term revenue. Lee said, "Because private equity generally aims to recoup investments within five to seven years, long-term investment, technology development, and employment stability may be undermined."
Attorney Kim Hee-kyung explained the legal basis for board defense rights. Kim emphasized, "A director's authority is delegated by shareholders, and it is a legitimate performance of duty for the board to take defensive measures to protect the value of the company and its shareholders."
Kim said that in a hostile M&A situation, a board taking no action could itself amount to a breach of the duty of care. Kim added that the Seoul Central District Court's dismissal of Young Poong's petition for an injunction to ban the company's repurchase tender offer was likewise a case in which the court recognized the Korea Zinc board's defensive actions.