Private equity firm MBK Partners, which previously drew concerns in South Korea over potential leaks of national core technologies through overseas sales, has now been urged by the Japanese government to stop a planned acquisition on similar grounds. The move is expected to affect the outlook for the ongoing management control dispute at Korea Zinc involving MBK and Young Poong.
According to the Nikkei newspaper on the 23rd, the Japanese government issued a recommendation to halt MBK’s plan to acquire Japanese machine tool maker Makino Milling Machine Co., citing the Foreign Exchange and Foreign Trade Act.
Machine tools are considered dual-use goods that can be used for both civilian and military purposes and are designated a “core sector” under the law. Foreign investors must undergo prior government screening before acquiring shares.
Japan said Makino’s machine tools are sensitive items with high potential military use and are widely used across defense equipment, including missiles and submarines, as reasons for the recommendation. A company receiving such a recommendation must decide within 10 days whether to accept it; if it refuses, the government can issue a stop order.
Chief Cabinet Secretary Minoru Kihara said at a regular briefing that “it is true that a recommendation to halt the investment was issued as of the 22nd,” adding that it reflected the review panel’s judgment that there was a risk of developments that could harm national security.
Japan’s sensitivity to technology leakage is often linked to the “Toshiba Machine COCOM violation” case from 40 years ago, in which a Japanese company illegally exported high-performance machine tools to the former Soviet Union, contributing to improvements in Soviet submarine technology.
The decision also aligns with a broader global tightening of rules around strategic industries and materials, including defense, rare earths, critical minerals and mining. Major countries such as the United States and China have strengthened efforts to limit foreign influence in key technologies and strategic sectors on economic security grounds. The fact that MBK’s fund includes capital from China and the Middle East likely weighed on Japan’s assessment.
Concerns over MBK’s overseas sales of core technologies have surfaced in South Korea before. In 2019, MBK pursued a sale of Doosan Machine Tools to China, but the deal was reported to have collapsed after opposition from the South Korean government over fears of leaking national core technologies, including design and manufacturing know-how for high-precision five-axis machining centers. Subsequent overseas sale attempts also failed, and the company was ultimately sold in 2021 to South Korean firm DTR Automotive.
With Japan now also moving to block MBK’s acquisitions and sales, related controversy is expected to intensify in the Korea Zinc control fight.
Korea Zinc is described as the country’s only company producing critical minerals based on national core technologies and advanced strategic technologies, and analysts say the identity of any acquirer could significantly affect supply-chain stability and key national industries. As the importance of Korea-U.S. supply-chain cooperation has grown following plans to build a smelter in Tennessee, U.S. political circles, as well as those in South Korea, are closely watching MBK’s bid to secure management control of Korea Zinc.
* This article has been translated by AI.
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