Orchem rises on backdoor listing news
Shares in Orchem, a local bioengineering firm, rose by the daily limit yesterday on the news that the company is being used for a backdoor listing by Celltrion, a rapidly-rising Korean biopharmaceutical company.Orchem rose 645 won (60 cents), or 15 percent, to 4,950 won. It was the first day the trading of shares in Orchem resumed since Celltrion announced it would merge with the company in a regulatory filing last Wednesday. Celltrion will become the secondary Kosdaq-listed company’s biggest shareholder.
The Korea Exchange, the local bourse operator, suspends stock trades when a company changes its biggest shareholders for the purpose of a merger and acquisition. It lifts the suspension if the company submits a detailed M&A proposal, which Orchem did on Monday.
A backdoor listing is a strategy to go public that is used by companies that fail to meet the criteria for listing on a stock exchange. To get onto the exchange, the company acquires an already listed firm.
Last month, Celltrion applied for a preliminary approval for a listing on the benchmark Kospi. But the Korea Exchange turned it down because the company did not meet the requirement, which is at least 20 billion won in annual sales on average for the latest three years. Shin Ji-won, an analyst at Mirae Asset Securities, said whether Orchem shares will continue to climb remains to be seen. “But Celltrion is grabbing attention for its potential growth,” she said. “It’s backdoor listing through Orchem will help raise interest in Korea’s bio industry.”
By Moon Gwang-lip Staff Reporter [joe@joongang.co.kr]
with the Korea JoongAng Daily
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